JERSEY CITY, NJ--(Marketwired - Mar 28, 2017) - If you are a newlywed, a new parent or started a new job in 2016, you could see a big change in your taxes. Even if one of these life changes happened on the last day of the year, it can change your filing status for the year. For example, if you married on December 31, you can file jointly for that year.
At Jackson Hewitt Tax Service®, we believe that life changes are one of the most important things to consider and discuss with a tax professional every year.
Here are three major status changes you should consider that can impact your taxes:
1. Status Changes: Getting married, getting divorced or separated, or being widowed
When you get married, you can file jointly, which combines your incomes and allowable expenses. The tax rate may be lower than the rates for other filing statuses and, if you do not itemize deductions, the standard deduction could be higher.
If your divorce is final by the last day of the year, you are considered unmarried for the whole year. You cannot choose Married Filing Jointly, or Married Filing Separately, as your filing status.
If you've lost your spouse during the current tax year, you may still file a joint tax return and claim the personal exemption for your late husband or wife. For the two years following the death of your spouse, you may qualify to file using the "Qualifying Widow(er)" status, which allows you the standard deduction amount and tax rates of the Married Filing Jointly status. You must have a dependent child to qualify for this filing status.
2. Dependent Changes: From having a baby to caring for your parents
When people think of life changes, the usual ones that come to mind include having a baby. This bundle of joy is a new deduction and may also qualify you for additional tax credits which can increase your refund.
A dependent does not have to be your child. It's increasingly common today for taxpayers to care for additional family members, both physically and economically. Taking care of an older parent, a family member who needs help, or even an older child that has moved back into the home can produce a tax benefit. Each of these drive changes to a tax return, including a possible additional dependent exemption and deductions and credits related to other expenses, such as medical and education costs.
3. Work-Related Life Changes: Moving for a job; leaving a job; retiring from your job or starting your own business
If you moved for a job that is at least 50 miles away from your home and held this job for at least 39 weeks, you can claim your moving expenses even if you don't itemize deductions.
Likewise, if you have been laid off or lost your job, there are many potential changes for your tax return related to changes in income level. There may be many impacts to your tax return such as the taxation of unemployment benefits and the ability to claim certain income-related credits and deductions previously not allowed.
You might also have new business ventures. From small businesses in the home, to part-time consulting work or more elaborate small businesses, these can drive changes to your tax return and create new opportunities for benefits never before available.
As you organize your tax documents in preparation for filing, take a bit of extra time to reflect on your year and look for those life changes. Talk with your Jackson Hewitt Tax Pro to see how these and other changes might affect your tax return and potential refund.
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About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission of offering its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead with Maximum Refund and 100% Accuracy Guarantees. With approximately 6,000 franchised and company-owned locations, including 3,000 in Walmart stores and online and mobile tax solutions Jackson Hewitt makes it convenient for clients to file their taxes. For more information about products, services and offers, or to locate a Jackson Hewitt office, visit www.JacksonHewitt.com or call 1 (800) 234-1040.