As John Lennon once said, “life is what happens to you while you are busy making other plans.” Some of those biggest changes in day-to-day life have lasting effects — even when it comes to tax time.
Read up on how some of these major milestones could have lasting effects on your day-to-day budget and learn how to prepare tax-wise.
Life Event No. 1: Marriage
When those wedding bells start ringing, they say everything changes — including your tax status. As you prepare to become bound for life, take a look at how it’s going to affect your bottom line — you could either save money after you’re married or you could owe more together than you would if you and your spouse stayed single.
Life Event No. 2: Having a Baby
When baby makes three — or four, five or more — your entire world is bound to get turned upside down. But if baby makes two, you might be able to score a tax break — for single parents, you might be able to score the child tax credit, and even file your taxes as head of household and take advantage of lower rates once your baby is born.
Life Event No. 3: Becoming a Homeowner
Making a house into a home is the quintessential American dream — and the IRS gives you a little boost once you sign on the dotted line. The tax code includes deductions for mortgage interest and real estate taxes that you pay as a homeowner — which is more money back in your pocket.
Life Event No. 4: Retirement
After you clock out for the last time, your hard work might be done, but your taxes aren’t. Even though your taxes might go down when you stop earning a paycheck, you’ll still have to pay income taxes once you retire — and just how much you’ll pay varies depending on where you live.
Life Event No. 5: Your Kids Head to College
When your not-so-little ones fly the nest and head towards higher education, you might be able to get a helping hand from the IRS if you’re assisting your kids with their college expenses. You might qualify for a range of income tax deductions and credits depending on how much you’re helping them with that quest for the cap and gown.
Click here to keep reading about useful tax breaks for 2018.