The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline. Tax information below will change next year for your 2018 taxes under the new tax law effective on your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Whether you got married last year or are purchased your first home, changes experienced in your life can bring about many questions and uncertainties. Although you may have questions about how life events affect your finances, one thing is certain, your, what might seem crazy, ever-changing life can save you money on your taxes.
Did you get married last year? Purchase your dream home? Have a baby? Or have another life change? Don’t worry we have you covered. Check out just a sample of big life events that save you money at tax time and how we can help you.
Getting married. Did you get married this year, or are you considering it? We know weddings cost a bundle and can really set you back, but one perk of getting married is you could now see some bigger tax benefits than when you were single.
Now that you’ve tied the knot, you and your loved one can now file your taxes as married filing jointly and may see lower tax liability than when you were single. This is because there are lower federal tax rates for couples who file married filing jointly compared to filing as single, most married couples will see tax savings or a “marriage bonus”.
You will also see bigger tax deductions and credits now that you can file as married filing jointly. For example, personal exemptions for both you and your spouse at $4,050 each in 2017, a bigger standard deduction of $12,700 for married filing jointly instead of $6,350 for single, and an Earned Income Tax Credit of up to $6,318 with three kids if you are married filing jointly. Even if you were married on December 31 of last year, you are considered married all year and can reap the rewards of being married.
Buying a new home. Homeownership is a big and rewarding life change that is also one of the biggest tax savings people see. Your mortgage and property taxes can really break the bank, but if you purchased a home this year or you are considering it, you can deduct your home mortgage interest and property taxes. Also, don’t forget the points you paid to secure the loan can also be deducted.
Having a baby. Did you have a baby last year? If so, congratulations on your new addition to the family! Combined with all the joy and excitement a child brings, you may be trying to figure out how you’re going to pay the costs of supporting your baby.
Well, fortunately, your family is now eligible for new tax deductions and credits as well. Some of the tax benefits you will receive for having a baby are the dependent exemption of $4,050 per dependent for 2017, the child tax credit of $1,000, and the Earned Income Tax Credit worth up to $3,400 with one child and up to $6,318 with three or more kids. You can see why your new baby can be considered your biggest little tax deduction.
TurboTax can help you save money through life’s transitions. Life transitions may feel like many things at once: exciting, emotional, confusing, hopeful and often expensive. On the bright side, these life moments often bring big tax benefits.
Don’t worry about knowing how life events can save you money on taxes. TurboTax will ask you simple questions about you and give you the tax deductions and credits you deserve based on your answers. If you still have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered from the comfort of your couch. The TurboTax Live CPA or Enrolled Agent can even review, sign and file your tax return.