Three Life Events That Can Impact Your Taxes

Posted on in IRS Issues

Cook County IRS issues lawyer, life events impact your taxesStaying on top of your taxes is an important part of managing your overall finances, as it can prevent you from incurring unnecessary fines and experiencing more serious IRS issues. Moreover, it may even save you money. Anytime you experience significant life events, you are especially susceptible to seeing changes in your taxes, such as a difference in how much you owe, how much of a refund you are entitled to receive, or a difference in the types of tax breaks you may be eligible to claim. 

When to Consult with a Professional

Whenever you experience any of the following life changes, it is wise to speak with a qualified accountant and tax law attorney to ensure you are properly filing your taxes to reflect the changes. This will help you avoid any potential conflict with the IRS that can arise from reporting incorrect information on your returns.

Change in Marital Status – Whether you get married or go through a divorce, you will need to make sure the IRS has a correct record of any name change you may incur due to the transition. Make sure the name on your tax return matches the name you have on record with the Social Security Administration.

If you need to change your name with the SSA, you can do this by filing a Form SS-5 at your local SSA office. If your names do not match on your tax returns, you may run into delays processing them or have trouble receiving your refund. When it comes to divorce costs, you cannot deduct legal fees or court costs, but you may be able to deduct legal fees paid for tax advice.

Change in Job – If you experience a job loss, you need to report any unemployment compensation you receive to the IRS by including it in your income on Form 1099-G, and you may be expected to pay quarterly estimated tax payments. If you begin work with a company as a new employee, you will be required to pay the IRS via withholding, which your employer should arrange. If you begin a job as a self-employed individual or contractor, you may also be required to pay self-employment tax, and it will be up to you to report your work to the IRS. 

Moving or Home Purchase – When it comes to moving or purchasing a new home, your taxes may be affected in various ways. For starters, you may actually be able to save some money if you deduct your moving expenses. Like many deductions, however, you must meet certain criteria in order to claim them. If your move was closely related to work (moving locations to begin a new job) and the IRS time and distance tests are met, you may deduct reasonable moving expenses when you file your taxes.

Also, if you purchase a home, you can typically deduct all of your home mortgage interest as long as you file the proper forms. Additionally, if you purchase your very first home, be sure to keep clear and accurate records of the adjusted basis of the house, including the purchase contract and settlement papers. These records will be important when it is time to report the purchase to the IRS or claim any deductions. 

Many life events qualify you to save money where your taxes are concerned and require special attention in order to properly report the changes. If you run into issues with the IRS due to a life event or have concerns about a recent change you believe may impact your tax situation, speak with a knowledgeable Cook County IRS issues lawyer for guidance. Call the Law Offices of Eric G. Zelazny today at 708-888-2299 for a consultation.

Source:

https://www.irs.gov/individuals/did-you-know-life-events-like-marriage-birth-and-divorce-may-have-a-significant-tax-impact

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