Whether you got married last year or bought your first home, the changes in your life can lead to many questions and uncertainties. While you may have questions about how life events affect your finances, one thing is certain, your ever-changing (which may seem crazy) life can save you money on your taxes.
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Did you get married last year? Buy the house of your dreams? Have a baby? Or do you have another life change?
Don’t worry, we’ve got you covered
Find out just a sample of the big life events that could save you money at tax time and how we can help.
Did you get married this year or do you plan to do so? We know that weddings are very expensive and can really cost you, but one of the benefits of marriage is that you can now enjoy greater tax benefits than when you were single.
Now that you’ve tied the knot, you and your loved one can now file your taxes as a spouse and can see your tax liability lower than when you were single. This is because there are lower federal tax rates for couples who jointly file a marriage declaration compared to a single declaration. Most married couples will benefit from tax savings or a “marriage bonus”.
You may also see greater tax deductions and credits now that you can file a joint return as married. For example, there is a larger standard deduction for the 2021 tax year. The standard deduction has increased to $12,550 if you are filing as single and $25,100 for married filings jointly. Also, for 2021, the earned income tax credit can be as high as $6,728 with three children if you are married and filing jointly. Even if you were married on December 31 of last year, you are considered married all year and can reap the rewards of your marriage.
Buy a new house
Home ownership is a significant and rewarding life change that is also one of the biggest tax savings people see. Your mortgage and property taxes can really blow your piggy bank, but if you bought a house this year or are planning to, you can deduct your mortgage interest and property taxes.
Maximize your deductions and get all the tax relief you’re entitled to when you file your taxes with TurboTax Deluxe. We’ll search over 350 tax deductions and credits to ensure you get the maximum refund possible. Start free and get up to $10 extra off TurboTax Deluxe when you file.
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Have a baby
Did you have a baby last year? If so, congratulations on your new addition to the family! Combined with all the joy and excitement a child brings, you may be trying to figure out how you’re going to pay for your baby’s support costs.
Well, luckily your family is now also eligible for new deductions and tax credits. Some of the tax benefits you will get for having a baby are the Child Tax Credit and the Child Care and Dependent Care Credit. The increased credit is a benefit for new parents.
Starting in 2021 (taxes you file in 2022), the Child Tax Credit has increased from $2,000 to:
- Up to $3,600 for each eligible child under age 6
- Up to $3,000 for each eligible child aged 6 to 17
This is the first time that families with 17-year-old children will be eligible for this credit.
For the 2021 tax year only, the child and dependent care credit has been expanded in several ways. The child care expense percentage and thresholds have been expanded, so you can get a credit of up to 50% of $8,000 ($4,000) in child care expenses for a child under 13 and up to 50% of $16,000 in fees ($8,000) for families with two or more dependents. In previous years, this credit was non-refundable, but when you file your 2021 taxes, this credit will be refundable if you have lived in the United States for more than half of the year. This means that even if you don’t owe any tax, you may be able to get the full credit as a refund.
You can see why your new baby can be considered your biggest little tax deduction.
TurboTax can help you save money during life’s transitions
Life transitions can feel like many things at once: exciting, emotional, confusing, hopeful and often costly. On the bright side, these moments in life often bring big tax benefits.
Don’t worry about knowing these tax rules. TurboTax will ask you simple questions and tell you what tax deductions and credits you are entitled to based on your answers.
If you have any questions, you can connect live via one-way video to a live TurboTax tax expert with an average of 12 years of experience to get your tax questions answered from the comfort of your couch. TurboTax’s tax experts are available in English and Spanish year round and can also review, sign and file your tax return or you can simply submit your taxes to them in full. All from the comfort of your home.