Taxes and Life-Changing Events
Are you or have you put off life-changing events for these financial reasons? Here is an overview of life-changing events and their tax implications.
- 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:
Getting married will change your life in many ways, including your tax situation and benefits:
Divorce will also affect your taxes:
Having a child or otherwise gaining a dependent can qualify you for several tax benefits:
If you are unmarried 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 if this is the case, as this status has great tax benefits. Additionally, determine if your child can 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 you may be entitled to based on the information you report.
If you, your dependent, or your spouse go to college or pursue an education in or after high school, there are tax benefits for both of you:
Suppose you are a teacher or educator at a qualified educational institution. In that case, you may be able to claim certain deductions and expenses, such as classroom equipment, teaching materials, development courses, higher education courses, and more.
Once you own a home, many tax benefits become available to you:
Employment is the cornerstone of the economy, and having a job has many associated tax benefits:
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 year.
- Discover some deductible job-search expenses, such as travel and transport expenses when traveling for interviews due to a job-search.
When you retire, the income you have saved may or may not be taxed:
"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-related items 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—eFile 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 information. Submit 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 administrator to claim any benefits available to you. You should also review and change your beneficiaries if possible.
- Protect any taxpayer's identity if it's used to file a fraudulent tax return. Make sure to send copies of the death certificate to the IRS to 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 an 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:
- Burial, funeral, and cemetery expenses.
- Credit card fees (non-business).
- Home repairs are not deductible and should not be confused with home improvements.
- Life insurance premiums (unless part of an alimony payment).
- Rent payments.
Find more expenses that do not qualify as tax deductions.
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 Tax Refund. Start Tax Preparing now!
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