5 Major Life Changes That Can Impact Taxes
Getting married, buying or selling property, having children, or retiring are big life changes and also can have a big impact on a taxpayer's taxes. Simply put — life changes a person's taxes. Jackson Hewitt encourages taxpayers to understand how major life changes in 2019 may bring credits and deductions that may lower a taxpayer's tax burden or increases their refund.
“Life changes bring on more than a new baby, a new spouse, or a new house; they also bring major tax implications,” said Mark Steber, Chief Tax Officer at Jackson Hewitt. “At Jackson Hewitt, we enjoy celebrating life's milestones with our clients, and our Tax Pros specialize in finding the extra credits and deductions associated with these changes.”
1. Having a baby
As long as a taxpayer had a baby any time in 2019 before midnight on December 31, 2019, they are eligible for the full credits and deductions available for the child, as if they've cared for the child since January 1, 2019. The Child Tax Credit is equal to $2,000 per dependent child under age 17, and the Child and Dependent Care credit can get you a credit on up to $3,000 of childcare costs for a child under age 13. Additional incentives like the Earned Income Tax Credit (EITC), which could result in a credit of up to $6,557, are available to those who qualify. If a taxpayer is a single parent and this is their first child, they may now be eligible for the Head of Household filing status.
To celebrate the babies who bring on these extra tax breaks, participating Jackson Hewitt locations are giving away free “Cutest Tax Break Ever” baby onesies. Taxpayers can call their local offices and see if onesies are available. To help spread the word and make sure taxpayers know how much life can change their taxes, Jackson Hewitt is encouraging clients to use the hashtag #TaxBreakBaby on social media.
2. Getting married (or divorced)
For taxpayers who are changing their filing status from single to married filing jointly or back to single, they could see a big change in their standard deduction. For the 2019 tax year, the standard deductions are:
- Single/Married Filing Single*
- Head of Household
- Married Filing Jointly/Qualifying Widow(er)
*Married Filing Single may have to itemize and claim less than the standard deduction
3. Buying a home
With the increased standard deduction, it may not be beneficial for people who don't own a home to itemize. But if a taxpayer bought a home in 2019 they may have more deductions making itemizing deductions greater than the standard deduction, and this could lower taxes more. The deductions for owning a home include mortgage interest and real estate property tax. Additionally, certain home improvements that make the home more energy efficient may generate tax credits now and utility savings in the future.
4. Getting an education
There are nearly a dozen tax benefits designed to help higher education students save money, from the American Opportunity Tax Credit to the Lifetime Learning Credit. Qualified expenses include tuition, books, supplies, and possibly travel costs related to college.
Individuals with employment changes, including retirement, may be eligible for new deductions or filing requirements. For those that are self-employed, don't miss out on often-overlooked deductions for qualified vehicle expenses, home office supplies, and more.
Taxpayers who experienced a major life change this year should be sure to talk to a Tax Pro to ensure they take advantage of the tax breaks associated with their life changes. Jackson Hewitt Tax Pros are ready to help hard-working taxpayers find every credit and deduction available to them. Visit jacksonhewitt.com/officelocator to find the nearest office location.