Taxes and Life Changing Events

Life Changing Events

Are you putting off life-changing events for these financial reasons?

  • Lack of savings
  • Difficulty paying bills
  • Paying off credit card debt
  • Concerns about losing a job
  • Worries about the economy
  • Taking care of elderly parents or relatives

Don't let finances stop you from living your life! These major life events could positively change your tax situation and dramatically affect your tax benefits:

When you prepare your tax return on efile.com, we will help determine which tax breaks you qualify for based on the events that happened to you during the 2020 Tax Year. That way, we can be sure to include any tax savings on your tax return. Any of the events above may also affect your paycheck tax withholdings, so you should review and adjust your W-4 every time your life changes. Even if they do not affect your paycheck, if you qualify for certain tax credits or tax deductions, such as home expenses and improvements, you may still want to update your W-4 anyway. Use the FREE eFile.com Tax Withholding Assessment Tool to see if you would need to submit a new W-4!

Marriage

Getting married will change your life in many ways, including your tax situation and benefits:

Divorce will also affect your taxes:

Children

Having a child or otherwise gaining a dependent can qualify you for a number of tax benefits:

If you are not married and have a child, you may qualify for the Head of Household filing status, or HOH. Consider using the free eFile STATucator or HOHucator to determine as this status has great tax benefits. Additionally, determine if your child is eligible to be claimed as a dependent using this free DEPENDucator.

When you prepare and file with eFile.com, the eFile app will determine and apply all these credits and deductions that you may be entitled to based on the information you report.

College, Education

If you, your dependent, or spouse go to college or pursue an education in or after high school, there are tax benefits for both of you:

If you are a teacher or educator at a qualified educational institution, you may be able to claim certain deductions and expenses, such as classroom equipment, teaching materials, development courses, higher education courses, and more.

House

Once you own a home, many tax benefits become available to you:

Job

Employment is the cornerstone of the economy and having a job has many associated tax benefits:

Unemployed

Being unemployed and looking for a job has the following tax benefits: 

  • Find out the tax effects of job loss and unemployment. Since unemployment compensation is taxable income, it must be reported on your tax return for a given tax year.
  • Discover some deductible job-search expenses, such as travel and transport expenses when traveling for interviews as a result of a job-search.

Retirement

When you retire, the income you have saved may or may not be taxed: 

Death

"In this world nothing can be said to be certain, except death and taxes," Benjamin Franklin said. When death comes, taxes follow. Consider these tax things when someone dies: 

  • If property or money is inherited, the person who inherits it may owe an estate tax
  • When you prepare and file a tax return on eFile.com, there's a box to check to indicate that you're filing the return for a deceased taxpayer. You can also enter the date of death on the return. Before you start, find out if the person is required to file a tax return
  • Use Form 1310 to claim a tax refund for a deceased taxpayer - eFileIT this form.
  • If you also need to file previous tax returns for the deceased taxpayer, find, download, and complete tax forms for any tax year
  • Don't have their tax information? You can request a free tax return transcript from the IRS. 
  • The IRS may need your permission to receive a deceased taxpayer's informationSubmit an information request with the taxpayer's full name, address, and social security number. Additionally, you will need a copy of their death certificate and either a copy of Letters Testamentary approved by the court or IRS Form 56, Notice Concerning Fiduciary Relationship, if there is no court proceeding.
  • If your deceased spouse was on a retirement plan, contact the employer or plan's administrator to make a claim for any benefits available to you. You should also review and change your beneficiaries if possible.
  • Protect any taxpayer's identity in case it's used to file a fraudulent tax return. Make sure to send copies of the death certificate to the IRS so they can update the taxpayer's records and each credit reporting bureau so they can put a "deceased alert" on the taxpayer's credit card report. You may also need to review their credit report for any questionable activity. If you are writing and submitting an obituary to a newspaper or other publication, don't put too much information that could be used by identity thieves, such as address, birth date, or mother's maiden name

Other Life Events that Affect Your Taxes

The following events and situations may have an impact on your taxes. Review these pages to learn how to handle them:

Are there Life-Changing Events that Don't Affect my Tax Situation?

Life-related expenses that are not tax deductible include:

Find more expenses that do not qualify as a tax deduction.

How will my Life Changes Affect my Paycheck?

Use the FREE eFile.com Tax Withholding Assessment Tool to see if you need to update your tax withholdings! Learn how to optimize your withholding and keep as much of your hard-earned money as possible. Then, prepare and file with eFile.com and get the most out of your 2021 Refund. 2020 Taxes are due April 15, 2021.

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