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Whether you got married last year or 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:, 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?
Check out just a sample of significant life events that could 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 that you can 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 may also see bigger tax deductions and credits now that you can file as married filing jointly. For example, there’s a bigger standard deduction for tax year 2023. The standard deduction increased to $13,850 if you are filing as single and $27,700 married filing jointly. Also, for 2023, the Earned Income Tax Credit is up to $7,430 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.
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 Child Tax Credit and Child and Dependent Care Credit.
For tax year 2023 (the taxes you file in 2024), the provisions are:
Child Tax Credit:
- Up to $2,000 for 2022 – 2025
- Each dependent child must be under 17
- Refundable up to $1,600
- The credit is available if you earn up to $200,000 as a single filer and up to $400,000 if you are married filing jointly.
Child and Dependent Care Credit:
- Up to 35% of $3,000 ($1,050) of child care expenses for a dependent child under 13, an incapacitated spouse or parent, or another dependent so that you can work or look for work. If you have two or more dependents, the credit will be up to 35% of $6,000 in expenses ($2,100).
The credit will be reduced at incomes over $15,000. You can see why your new baby can be considered your biggest little tax deduction.
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 these tax rules. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.
