There are several kinds of major life events that can affect your income tax requirements, tax benefits and withholding. It could be marriage, welcoming a new child, divorce, or loss of a loved one — all of these can impact your tax situation. Here are some common life events and an overview of their effects.
Marriage
Getting married may affect your filing status, tax withholding and eligibility for certain tax benefits. Newly married couples should report any name change to the Social Security Administration and any address change to the U.S. Postal Service, employers and the IRS. They should also review their tax withholding and update their W-4 with their employer, if needed.
Birth or adoption of a child
A new child may make you eligible for tax benefits, including the Child Tax Credit, Adoption Credit or Child and Dependent Care Credit. There are individual eligibility requirements for each type of credit. You must have a valid Social Security number along with the child, to apply.
Divorce or legal separation
Getting divorced or legally separated affects filing status, tax withholding, who can claim dependents, and eligibility for certain credits and deductions. Changes to income, withholding and filing status may require you to update your Form W-4.
Death of a spouse or family member
The death of a spouse or loved one can affect your filing requirements and status. In general, a final individual income tax return of a deceased person should be filed the same way if the person were alive. All income must be reported up to the date of death along with the claiming of any eligible credits or deductions.
After any major life event, you should review your withholding, update your personal information and keep important records. If you need help understanding how these changes might affect your tax situation, please contact our office.
This article carries no official authority, and its contents should not be acted upon without professional advice. For more information about this topic, please contact our office.