Major Life Changes and Your Taxes

Everyone’s journey in life goes a little differently, but no matter what life choices we make we still have to pay taxes. Some momentous milestones in your life may not have an effect such as getting to take that dream vacation you always wanted, but a vast majority of major life events will indeed change the way your taxes come out. While this list doesn’t encompass every single fork in the road that awaits you, here’s some of the more common major life events and how they will have an impact on your taxes.

Getting Married

Finding that special someone can be hard, and makes tying the knot all the more something to celebrate. Marriage is often the first major game-changer when it comes to doing your taxes. Your and your spouse’s income and deductions need to be examined together in the tax planning process as well as making major financial decisions. Even if you opt not to file jointly with your spouse on the same tax return, the rules that applied to single people before will no longer apply to you. Most married couples enjoy more tax benefits, but there are cases where getting married can cause higher taxes. In addition to open and honest communication being a high priority for a happy and healthy marriage, it’s also important for your taxes to be prepared correctly.

Having Children

Starting a family is a blessing and one that also drastically changes your tax situation. While you can claim your children as dependents, there are other related tax benefits only available to you if your children are a certain age. Things like education and medical expenses for your children may also provide you tax relief in addition to daycare. In wanting to provide the best for your children and planning for their futures, you’ll also want to pay more attention to tax-deferred accounts like college savings plans and health savings accounts for those rainy days.

Starting a Business

Thinking about leaving your job or maybe starting a side hustle and seeing where it goes? We’re happy to help you with every step of starting a new business which is not just an income source, but also a massive lifestyle change. Your tax situation completely changes when you make the shift from employee to business owner, and starting up and winding down aren’t the same process as looking for and quitting jobs. You get a lot of write-offs as a business owner but also some expensive surprises if you’re not careful, so having a good tax adviser you can trust is important.

Buying a House

Buying your own home is a big part of the American Dream and more often than not, a ticket to financial security. Homeowners are more favored by the tax code than renters, even when it comes to selling your home. If you’d like to do other things with your home like start a home office for the business you’ve always wanted or make additions to the property, this also has tax impacts. Starting the home-buying process can also take a long time and lenders will need to see your tax returns in order to determine if you’re qualified for a mortgage. We’re here to help you qualify for the home of your dreams.

Preparing for Retirement

Taxes in retirement call for a combination of good tax planning as well as thorough retirement planning. When you’re getting ready to retire, you may have concerns about leaving a legacy behind for your loved ones or simply avoiding taxes on the money you worked all your life to earn. You may want to, or have to, keep working in retirement but would like to become fully retired. This major life event is one that we are happy to help you plan for so that you can enjoy the retirement you deserve and without giving up too much of your life savings to the government.

Rue & Associates is here for your momentous life events. We strive to take the stress out of the way your tax situation will change as a result. Review our Helpful Tax Tips for 2017 and contact us to speak to one of our friendly and professional tax law experts.