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5 Life Events That Can Impact Your Taxes
Life’s milestones bring more than just celebration - they often come with tax changes too. Whether it’s getting married, buying a home, or retiring, staying proactive about your tax situation can save you time and money.
1. Marriage
Tying the knot? Your new household income may affect your tax bracket. If you plan to file jointly, adjust your withholdings to account for potential changes. Some two-income couples might owe more, while single-income households could see savings.
2. Buying a Home
Homeownership opens the door to tax deductions, such as mortgage interest and property taxes up to a certain limit, if you itemize. Adjust your withholding to reflect these benefits, potentially freeing up cash for other goals.
3. Having a Child
A new addition to the family can qualify you for child, adoption, or child care tax credits. Check the rules to see if you qualify.
4. Divorce
A finalized divorce changes your filing status, which impacts your tax brackets and withholdings. Update your Form W-4 promptly to avoid surprises.
5. Retirement
Without a regular paycheck, managing tax withholdings becomes more complex. While some income sources automatically withhold taxes, others, like capital gains, may not. Work with a tax advisor to ensure accurate estimated payments and avoid penalties from the IRS.
Key Actions to Take
Update Your Withholding: Use the IRS Tax Withholding Estimator to fine-tune your tax strategy.
Update Your Filer Status: Notify your employer within 10 days of a status change.
Report Name Changes: Inform the Social Security Administration if you’ve changed your name due to marriage or divorce.
Life’s big changes don’t have to result in tax surprises. Stay ahead by planning for the financial implications of these events.
Disclosure:
Winnow Wealth, LLC (“Winnow Wealth”) is a Registered Investment Adviser.
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Investment advisory services also offered through Brookstone Wealth Advisors (BWA), a registered investment advisor. Winnow Wealth & BWA are independent of each other.
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Winnow Wealth, LLC (“Winnow Wealth”) is a Registered Investment Advisor (“RIA”), located in the State of Texas. Winnow Wealth provides investment advisory and related services for clients nationally. Winnow Wealth will maintain all applicable registration and licenses as required by the various states in which Winnow Wealth conducts business, as applicable. Winnow Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion. Investment advisory services also offered through Brookstone Wealth Advisors (BWA), a registered investment advisor. Winnow Wealth & BWA are independent of each other.