Did some big events occur in your life last year? As you begin the new year and look back over the old, this is a great time to look at the tax deductions and credits that may be associated with those wonderful memories.
Did you get married this year?
Married life requires many adjustments, and you need to adjust to a new tax status as well. You’ll probably file your tax return as married filing jointly, since married couples filing separately are barred from many tax deductions and credits.
File a new W-4 with your employer to revise your withholding status from single to married to reflect your new status, if you haven’t already done so. And if you changed your name, report your name change to the Social Security Administration.
Comb through your wedding expenses for tax deductions. If you paid a ceremony fee to the church, it may be tax deductible. So might the venue fee if your reception was held in a museum or historical place or state park. If leftover flowers and food were donated to charity, that may garner a deduction as well.
Did you have a baby?
Your baby brings a new dependency deduction of $3,950 for your tax return, but other benefits are available as well.
Claim child related tax credits. If you have children under the age of 13, claim a child care credit if you pay someone to care for them while you are at work or looking for work. Depending on your income, that could save you up to $1,050 for one child and up to $2,100 for two or more dependent children.
You also may be eligible for a child tax credit, which is an additional $1,000 credit for children under 17. For married couples with income over $110,000 or $75,000 for a single parent, the credit phases out.
The earned income tax credit is based in part on how many dependent children you have. For 2014, if you have three or more children, you can earn up to $46,997 and qualify. With just two children, that drops to $43,756, and with one child it’s $38,511.
Claim the adoption credit if you adopted. You are entitled to a credit for up to $13,190 per child you adopt. The credit will begin to phase out for families with incomes above $197,880 and the credit will go away completely for those with incomes around $237,880.
Did you buy a new home?
A new home is exciting, and as you settle in, don’t forget about taxes. You’ll get a tax deduction for interest paid on your new mortgage, and if you sold another home, you can take an interest deduction on that home as well until the date of sale. And property taxes are deductible on all properties that you own. Points that you paid on your new mortgage are deductible as well. Review your settlement statement for points paid and prorated property tax you paid.
TurboTax will help you get all of the tax deductions and credits you deserve related to the events that have occurred in your life.
Check back with the blog soon for big events that trigger big tax deductions and credits.