Life happens, and with it comes changes that can make a significant difference in your tax situation. Let’s take a look at some of the major life events in 2024 that may influence your tax liability, deductions, and credits.
Got Married or Divorced
Tying or untying the knot doesn’t just change your relationship status—it also shifts your tax filing status. Marriage could open the door to tax benefits, such as a higher standard deduction for married couples filing jointly. On the other hand, divorce might mean adjusting to filing as single or head of household and revisiting who gets to claim certain deductions if children are involved.
Had a Baby
Welcoming a new member to the family is joyful—and comes with tax perks. You may qualify for the Child Tax Credit, Child and Dependent Care Credit, and even a dependent exemption that can lower your taxable income. Make sure to get that Social Security number in time to include your little one on your return!
Started a Side Gig
In the gig economy, extra income is common. Whether you delivered groceries, sold handmade crafts online, or freelanced part-time, that additional cash must be reported. The upside? You might be eligible to deduct business-related expenses like supplies, internet, or even part of your home office if you worked from home.
Sold a Home or Investment Property
Selling a home or other big investments could bring substantial financial gain—but also tax consequences. If it was your primary residence, you may qualify for exclusions on capital gains. However, selling rental property or other assets may result in taxable gains that should be reported.
Started Receiving Social Security or Inherited IRA Payments
Retirement milestones or inheritance can introduce new tax considerations. Social Security benefits may be partially taxable depending on your overall income. Similarly, distributions from an inherited IRA may increase your taxable income—especially if you’re required to take annual minimum distributions.
Lost a Job and Collected Unemployment
Job loss is tough, but don’t forget that unemployment benefits are taxable. Make sure to account for these payments when filing, as failing to do so could lead to unexpected taxes owed.
These life transitions often come with financial adjustments, and understanding how they affect your taxes is key to staying ahead. Whether you’re hoping for a bigger refund or bracing for a potential bill, being proactive can save you from surprises come tax time.
Need help navigating these changes?
Working with a tax professional can ensure you take advantage of every opportunity while staying compliant with tax laws. Schedule a confidential call, email us at info@axiomtax.cpa, or call (813) 977-0089.
