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03.07.2012 / 5 Life Changes That Could Impact Your Taxes

Your life is not static, and if you experienced a major life change in 2011, that could impact your tax return you will file. So, we have put together a list of 5 life events for you to review.

"If you experienced a major life change in 2011, that could impact your tax return."

1. Getting Married.  You’re ready to start on your journey in life as a married couple.  From a tax perspective, your filing status will also change to married, either filing jointly or separately.  A tax professional or tax preparation software can help you decide which works to your tax advantage. (Make sure your employers also change your filing status on 401(k) accounts.)  Also, your retirement account contributions and deduction limits may change.  And don’t forget, if you changed your name after getting married, you’ll need to apply for a new social security card with that name, or you could face delays in processing your tax return.

2. Buying a Home. It’s important that you learn about all the deductions you may qualify for as a homeowner, including mortgage interest, state and local property taxes, and loan origination fees (or points). 

3. Welcoming a Baby. Along with the pleasure of welcoming this new bundle of joy into your family you also get the opportunity to claim your newborn as a dependent, reducing your taxable income.  Also, as a parent, you may also qualify for the child tax credit, the earned income credit and a child care credit.  Finally, don’t forget to apply for a Social Security card for your baby.

4. Changing Jobs. If you relocate for work, you may be able to deduct your moving expenses.  If your job change leads to self-employment, you may need to make quarterly tax payments, and you’ll be subject to self-employment tax as well as income tax.  Also, unemployment wages are considered taxable income. 

5. Retiring. It’s time to enjoy the next phase of your life, but it’s also important that you understand the changes in your taxes too.

- Explore your options for taking distributions from your retirement plan.  What’s best for you depends on multiple factors, including your age and type of accounts you hold. 

- If you take on work, or even part-time, it may affect your Social Security benefits, potentially making them taxable.

For more tax saving strategies, tools and resources, visit First National Bank’s online Tax Center at www.firstnational.com and click on Tax Center.  You can also visit www.irs.gov, and click on “Individuals.”  Post your comments now on www.facebook.com/fnbomaha.

*This article does not constitute legal, tax, accounting or other professional advice.  Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.

Posted at 11:51 AM | Permalink
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