6 life events that change your taxes
From birth to death, how you live your life will affect how you file.
by: Geoff Williams
Somewhere, in a drawer, or on your phone or computer, you have photos of birthday parties, holidays, vacations, weddings and births. A wave of nostalgia probably courses through you, as you marvel at how your life has changed over the years. In fact, you could likely experience those same emotions by perusing other evidence of your life’s milestones: your old tax returns.
To be clear, nobody is suggesting you do this, but it’s important to remember that as your life changes, so too will how you prepare your taxes. Before the April 15 deadline hits, make sure to ask yourself: How has my life changed in the last year? These six milestones can really make an impact on your taxes.
You’re newly married. One of the first decisions to make after tying the knot is whether to file your taxes jointly or separately, says Mike Campbell, a San Francisco-based tax partner at BDO USA, a business services practice headquartered in Chicago.
“For the majority of couples, filing jointly is the easiest administratively, especially if you live in a state that taxes income on a community property basis,” Campbell says.
But that decision may also come with a price: potentially higher taxes. Some couples discover their tax tab is higher “because of the withholding levels on salaries,” Campbell says. “While the withholding taxes paid through payroll may have been sufficient for each spouse when they were filing as single taxpayers, the combined income as a joint couple may lead to a combined higher tax bracket,” he adds.continue reading »