Life changes can significantly impact your taxes. Whether you’re entering a new stage in life, making financial decisions, or adjusting to new circumstances, understanding how these changes affect your taxes is crucial. Here are situations where you should consider tax planning to help you navigate complexities and maximize your savings.
Marriage can lead to a “Marriage Penalty” or “Marriage Bonus” depending on your individual situation. If both spouses own homes before marriage, tax planning is crucial. Divorce requires careful planning due to changes in alimony and child support tax rules.
New additions to your family bring potential tax breaks like the child tax credit and credits for childcare or adoption expenses. Ensure you have a Social Security number for your newborn to take advantage of tax credits and deductions.
Increased income can mean a higher tax bill and potentially losing eligibility for certain tax breaks. Review your tax withholding and understand the tax implications of severance, vacation, and unemployment payments.
You can exclude up to $250,000 ($500,000 if married) of capital gains from your home sale if you meet qualifications. Tax planning can help you understand if you qualify for this and other home-related tax breaks.
Utilize tax-advantaged savings plans like 529, the American Opportunity Tax Credit, and the Lifetime Learning Credit. Early planning can optimize how you manage these expenses.
When in doubt, reach out. Don’t hesitate to schedule a tax planning session to maximize your savings and avoid unnecessary tax liabilities.
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