Tax Tips for 10 Events in Life

Event

Possible Benefit or Concern

Marriage

If married on Dec. 31^st, IRS considers you married for entire year.

  — some couples should adjust their withholdings to avoid penalties

Divorce

Once divorced, only one former spouse can claim a child dependent.

  — as of 2013, personal exemptions phase out starting at $250K AGI

Birth/Adoption

SS numbers must be obtaining before taking the exemption.

—    child care credit of $3K ($6K if 2 or more children)

—  adopting parent(s) can qualify for credit of $12,970 for 2013

Job Change

Pay for unused vacation and sick leave are taxable.

  — if you are in a low tax bracket, consider a Roth conversion

New Business

Record business meals, equipment, travel and auto expenses.

  — if you work from home, you may be entitled to a $1,500 deduction

Disaster

If allowable losses, then can be carried back 2 years and forward 20.

  — IRS rarely allows any type of carryback for individuals

Household

Minor and adult dependents are defined in IRS Publication 501.

  — for 2013, each dependent is worth up to $3,900

Medical

For 2013 and after, deduct medical expenses > 10%.

  — the previous hurdle of 7.5% still applies to those age 65 and older

Retirement

Withdrawals from Roth accounts do not raise Medicare premiums.

  — Roth withdrawals also do not raise taxes on Social Security payments

Death

Each spouse gets > $5 million exemption on gifts and estate

  — when spouse dies, add their exemption to yours by filing estate return