4 Life Changes That May Affect Taxes
For many Americans, tax season means getting a refund from the IRS. However, if you’ve experienced some life changes within the past year, they may affect your tax return and the amount of money you get back. Use the following guide to determine what could impact your tax preparation process this year.
What Life Changes Impact Tax Preparation?
1. Getting Married
Though filing a joint tax return with your spouse often results in bonuses, exemptions, and lower rates, you might encounter a “marriage penalty,” which causes couples to have a higher tax liability. This typically happens to couples who fall on either extreme of the tax bracket.
2. Going to College
Attending college often carries several tax benefits. For example, the American opportunity credit makes college students eligible for up to $2,500 during the first four years of their undergraduate program. Additionally, there’s the lifetime learning credit, which is worth up to $2,000 per year and available to graduate students.
3. Changing Jobs
Changing jobs may cause you to lose money on your tax return if you don’t make any adjustments to the amount you withhold. When you get a new job that results in a higher paycheck, withhold a bit more than you did at your previous position so you won’t owe anything at tax time.
4. Buying or Selling a Home
If you own a home, you can deduct your real estate taxes and mortgage interest for up to $10,000. Alternatively, if you sold your home within the past year, any profit below $250,000 will be tax-free.
If you need help with tax preparation this season, contact the team at ZP Tax, Inc. These accountants offer tax help and bookkeeping services to clients throughout Silver Spring, MD. Call (301) 587-4829 to schedule income tax prep and find out which documents you need to provide, or visit their website to learn more about their services.