What Are IRS Recognized Life Events
Especially in the wake of a worldwide pandemic, such as COVID-19, there are life events that change everything. Americore advises clients on preparing for all types of life events. But During tax season, the IRS publishes which of those life events it recognizes, and the implications of that recognition. Each life event might require action and changes on your part, and knowing what is needed can help you save taxes.
Birth Through Childhood
To those of you who are new to parenthood, congratulations! The IRS has some presents for you. If you want to read the details for yourself on the IRS website, you might want to also familiarize yourself with some abbreviations for child and other dependent tax credits.
Marriage
When people marry, they seldom imagine they will have to deal with IRS liens or complaint filings. Unfortunately, if you do not protect yourself, when you marry, you may share their obligations. The exception to this is if you can demonstrate to the IRS that you are an innocent spouse. Community property law have an impact on how you figure your income on your federal tax return when you marry. Because community property laws vary by state, make sure your account is aware of your new status, and ask what it might change in your tax filing.
Separated or Divorced
If you changed your name due to marriage or divorce, make sure your tax return matches the name currently registered with the Social Security Administration. Any mismatch can cause confusion and might delay the processing of your return. Make sure you notify the SSA as soon as your name changes. If it is too late, make sure you complete the field listing alternative names you are known by.
More important to some, is relief from join liability. Sometimes the IRS grants a spouse relief of joint liability for tax, interest and penalties on joint tax returns. If you are newly separated or divorced and your spouse had their own business complete with IRS liabilities, ask your own accountant about the details of this possibility.
IRS and the Health Care Law
Individuals are responsible to have health care coverage. If they work for an employer, that employer may be responsible for their health care coverage. Either way, the person covering the healthcare may be eligible for a premium tax credit.
Starting a New Career or Job Loss
When you began working for a new company, you filled out a new withholding form. Take some time to check it and be sure it is correct. If you lost a job and received unemployment benefits, it is considered part of your gross income for the year. You need to include it in your total income listed on your tax return. If you aren’t sure whether the unemployment is taxable, check with your accountant or read more here.
IRS Tax Relief Against Loss From Disasters and Casualties
For those who suffered losses for the tax filing year, the IRS offers relief. The relief is based on specific federal disasters in specific areas. Each disaster area entitles victims to some tax relief for a finite amount of time.
Persons with Disabilities
Your disability benefits and the refund you get for the EITC may qualify as earned income for the earned income tax credit. Some permanent disabilities allow you to claim a child of any age as a dependent. Learn more here.
Planning for Retirement
When you plan well for your retirement, you can enjoy it sooner. Click here for links to information on IRA’s, choosing a retirement plan, a pension and annuity income, retirement savings contributions credit, a tax sheltered annuity plan, railroad retirement benefits, mutual fund distributions and more.
First-time Homeowner
If you have recently become a homeowner for the first time, you finally get to deduct your monthly housing payment from your taxes. Find out more about home mortgage interest deduction here.
Moving?
Besides making sure the IRS, your employer and the license bureau have your new address, you may also be able to deduct your moving expenses from your taxes.
Bankruptcy
There are times people need to file bankruptcy for personal or business purposes, but it can make tax filing confusing. The IRS has a bankruptcy tax guide here.
Deceased Taxpayer
The last life event the IRS offers information about, is the death of a taxpayer. Though the taxpayer is no longer responsible for dealing with the IRS, the survivors, executors, and administrators need to wrap up his or her matters. Form 56, 559, 1310 and 4810 may help.