COVID-19 Update: Beaird Harris has shifted a significant number of our team members to work remotely.
We continue to serve and care for our clients, just as we always have, and are available by phone, video or email.

Beaird Harris will be closed on Friday, July 3rd in observance of the Independence Day holiday.

Blog

Major Life Events May Mean Major Tax Changes

Joe Vincent

Major life changes can be stressful, not least because they often affect your taxes. The following are just some of the many life events that you’ll encounter, along with some tips on how to cut your tax bill or save money.

Getting married. Your marital status affects the tax bracket you’re in and doubles your standard deduction to $24,800. If you are married and either you or your spouse is 65 or older, your standard deduction increases by $1,350. If both you and your spouse are 65 or older, your standard deduction increases by $2,700.

Get a bigger benefit: A spouse who doesn’t work can contribute to a spousal IRA if they file taxes jointly with a spouse who does work. If each spouse has an IRA, both can contribute up to $6,000 in 2021 ($7,000 if age 50 or older).

Getting divorced. If you have a divorce or separation agreement executed after Dec. 31, 2018, the payer spouse gets stuck with the tax bill, as alimony is no longer deductible from the income of the spouse paying it. On the other side, the spouse receiving the alimony payments doesn’t report the payments as income. Child support follows the same equation – it’s not deductible by the payer spouse, and doesn’t need to be reported as income by the spouse receiving the payments.

Birth. With a new birth comes a new dependent on your return. You may now qualify for credits and deductions that can have an immediate benefit on your tax situation. You also have the option of withdrawing $5,000 per parent (or $10,000 total as a couple) without penalty from qualified retirement accounts to help with costs associated with your new bouncing baby. You’ll still owe income taxes on this distribution, but can avoid an early withdrawal penalty.

Get a bigger benefit: Parents who work can take a tax credit for expenses related to dependent care for a child under age 13, so a newborn child would qualify. The maximum credit for one child is $1,050; the maximum for two or more children is $2,100.

Please call if you have tax questions about these and other major life events.

No Professional Advice, Client Relationship, or Reliance on Information

Please note that any information or content on our Website, or any forms or tools on our Website which allow you to submit information or make calculations, and your use thereof, are not intended to provide any kind of professional advice, consultation or service, including but not limited to, legal, accounting, tax, or business advice. Nor does any such information, content, forms, or tools, or your use thereof or reliance thereon, create or constitute an attorney/client, accountant/client, or consultant/client relationship. You should therefore not use our Website or reliance on any information, content, forms, or tools on our Website as a substitute for any kind of professional advice. Rather, you should consult with a licensed professional, including one employed by our Company, for any accounting or tax questions you may have. You agree that we will not be liable to you or to any third party to the extent you treat or consider any information, content, forms, or tools on our Website as constituting any kind of professional advice. The information and content, including but not limited to forms and tools, presented on or made available through our Website are made available solely for general information purposes. We, therefore, do not warrant the accuracy, completeness or usefulness of any such information, content, forms, or tools, and any reliance you place on the same is strictly at your own risk. We disclaim all liability and responsibility arising from any reliance placed on such materials by you or any other visitor to our Website, or by anyone who may be informed of any of its content.

Our Website provides illustrative lists of services that we provide. Nothing contained on our Website shall be construed as an offer or guarantee to provide any particular services to you, nor shall anything on our Website be construed as a direct solicitation for employment by any persons, companies, or organizations. Prior results we have obtained for others do not guarantee a similar outcome.

Share This
Share on facebook
Share on twitter
Share on linkedin
Share on email
schedule call

Schedule a complimentary call today.

We’ll help you get started and learn more about Beaird Harris.