Children, marriage, divorce: life events that complicate your tax situation and require the help of an accountant with a declaration

In life, only two factors are inevitable - taxes and death, Americans joke. Yes, you can be sure that you will definitely have to pay taxes in the US, but how much and under what conditions is a very unstable indicator that depends on various criteria. Some life events impact your tax situation more than others and confuse your return. If they happened in your life in 2021, then it is better to prepare your declaration with a professional accountant so as not to make costly mistakes.

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Marriage

Although the situation is different for everyone, in most cases, after getting married or married, you will pay less taxes. Filing a joint return usually entitles you to lower tax rates and higher deductions and limits on pension and charitable contributions that can be deducted from taxes. In addition, spouses have other tax options that single people do not have. For example, they can give each other more gifts without paying gift tax.

Professional accountant Michael Koloden reminds you that getting married obliges you to take several bureaucratic steps regarding taxation:

1. Change your last name in Social Securityif you changed it after marriage. The SSA must process the change in the system and forward this information to the IRS before you file your tax return. You should wait until the last name change process is completed before filing the return to avoid any complications that may arise if the last name on the return does not match the last name in the SSA database.
2. Make changes to the W-4 tax formto display your new marital status.
3. Change submission status. When you get married, the only tax filing statuses available to you are Married, Joint Return (Married Filing Jointly— MFJ) or "Married, Individual Declaration" (Married Filing Separately — MFS).

Divorce

Whether you've been married for 10 years or a couple of months, the dissolution of your marriage greatly affects your tax situation. Divorce ends the marriage, but does not remove your or your former spouse's tax liability. If your divorce is finalized before December 31 of the year you file for, the IRS will consider you unmarried for the entire year and you are not eligible to file a joint return even if you were married 11 out of 12 months. That is, when choosing the status of filing a declaration, you have the right to indicate only “single” or “head of household”.

In addition, you should decide with your ex-spouse who will list the minor children on the return and be entitled to the corresponding deductions. It is also important not to get confused with the taxation of alimony - this is a rather complex topic and it is better to discuss it with a specialist, since everything depends on the terms and conditions of the divorce. Guessing and putting numbers based on what you google is fraught with errors and audits by the IRS.

Regardless of whether you have registered or dissolved a marriage, it is better to file a declaration after that with the help of specialists. The company will help you prepare your declaration correctly and take into account all the nuancesMICHAEL KOLODEN CPA PC: 7308 18th Avenue, Brooklyn NY 11204; tel. (718) 360-5337; e-mail: [email protected].

Birth or adoption of a child

Replenishment in the family usually entails considerable expenses, but here you can save on taxes. Parents are entitled to an additional tax credit for the child, adoptive parents can deduct the cost of adoption from taxes. In addition, tax credits for education and earned income are available to parents.

Buying or Selling a Home

If you have acquired real estate through a mortgage, then the interest paid on it can be deducted from taxes. You can also deduct property taxes you paid at the state or city level from your federal return.

If you have sold your property, then part of the amount can be deducted from your taxable income. It depends on the filing status and your specific tax situation, but in certain cases the deduction can be as high as half a million dollars.

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Promotion at work

Usually, a promotion means a higher salary. This means that your income may be in a new tax fork, and part of your finances will be subject to a higher income tax rate. In addition to making sure this is correctly declared, you should also consider making changes to the W-4 form. It is better to adjust your monthly taxes withheld than to face a large underpayment when filing a return.

Getting an education

In the US, there are two tax credits available to those who have spent money on education: the American Opportunity Credit and the Lifetime Learning Credit. In total, these deductions can save you up to $4500 per year if you meet the maximum amounts for each. In addition, interest paid on student loans can be deducted from taxes.

Death of a close relative

In the US, even death does not exempt from taxes. You need to make sure that for the year of your relative's death, a final tax return is filed on their behalf. Depending on the assets left by the deceased, you may be required to file an estate tax return. It is better to entrust the preparation of these documents to a professional so that they are filed correctly and as beneficially as possible for the heirs.

Whatever changes occur in your life, the company's specialistsMICHAEL KOLODEN CPA PC they know how to deal with taxes in this situation and will help you file your return correctly. Contact: 7308 18th Avenue, Brooklyn NY 11204; tel. (718) 360-5337; e-mail: [email protected]

Read also on ForumDaily:

Deductions, limits and credits: important tax nuances to consider when filing a return for 2021

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