Learn something that 1 in 5 Americans don’t already know
The decisions you make in your life or the events that happen, good or bad, don’t just affect your personal life, they may impact your taxes as well.
According to a recent survey by H&R Block, more than one in five millennials (22%) do not realize that getting married, having a baby and buying or selling a home can have a major impact on their taxes’ bottom line. What makes this even more shocking is that almost three in four (72%) of these same millennials lived through at least one of these life changes in the past year.
What tax benefits have they missed out on? Let’s take a look at how life changes positively and negatively affect your personal income taxes in the State of Michigan.
The 6 life changes that you’ll want to share with your E&Y Tax Expert
- Marriage or Divorce: Marriage and divorce are complex changes when it comes to your April filing. Typically, marriage can provide tax breaks when you choose to file jointly. That tax break usually comes from lowering your overall tax brackets as a couple. In some instances, marriage has the opposite affect and brings negative tax implications. Alternatively, divorce and the separation of your filing often benefits the IRS. Plus, new tax laws surrounding divorce and alimony payments are making it even harder on divorced couples to keep money in their pockets.
- Children: Children, or as they are called at tax time, dependents, can greatly reduce your tax burden. Not only can a baby grant you an additional child tax credit, you also open up access to a range of other potential tax benefits – from credits for education to the Earned Income Tax Credit. Not a good reason to have a baby, but if you’re wanting to grow your family anyway, something to think about.
- Education: There are a host of credits and deductions that can be made for those pursuing higher education in the U.S. The American Opportunity Credit and the Lifetime Learning Credit are just two that our E&Y tax experts can talk to you about. Plus, there are deductions for tuition, student loan interest, continuing education for small business owners, and others to consider.
- Buying or Selling a Home: Have you bought or sold a home recently? When buying a home, there are many deductions you can take advantage of, including your mortgage interest and any real estate taxes. If you have sold, we can show you how you can avoid taxes on up to $500,000 in gains, if filing jointly.
- New Job or Promotion: Congratulations on that new job and welcome to a new tax bracket. Let’s talk about how to minimize the impact of your raise; we suggest adjusting your W-4 withholdings as well.
- Death: The only constant in life… death and taxes. In this case, should you, or a loved one pass, it is the responsibility of a personal representative to file a final tax return. A spouse can file a joint return for that year if he or she so chooses. Depending on assets, an estate tax return may also be required, which we can discuss in more length. If you have received anything from an estate, it is your responsibility to file your own tax return that includes those inherited assets.
Don’t let the stress of life changes hinder you from making the most financially sound decisions possible. Our E&Y Agency Tax Experts can help you navigate your new reality and provide the sound advice that can minimize or maximize your taxes.
About E&Y Agency
E&Y Insurance and Tax Agents are dedicated to giving our clients the products that provide quality protection and value pricing and the peace-of-mind in times of crisis. Our goal is to establish a successful partnership with our clients, our staff members, and our partner companies. Our success is measured by our clients choosing us because they believe in our ability to meet or exceed their expectations of price, service, and expertise. Call us now to talk about your insurance or tax needs!
