TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, March 16, 2013

WSJ: Tax Tips for Life's Big Changes

Wall Street Journal Tax Report:  Tax Tips for Life's Big Changes, by Laura Saunders:

Sometimes life's biggest changes can save you a bundle in taxes—if you know how to take advantage of them.

What was new in your life last year? Did you get married or divorced, or adopt a child? Did your parents move in—or your adult child? Did you lose a house to a storm? These and other major events often have tax consequences people are unaware of—precisely because they are unusual, unlike, say, deducting donations. And with big tax increases taking effect this year, it is all the more important for taxpayers to seize any break they can. Still, many overlook big potential savings. ...

[B]ig life changes happen with surprising regularity. Every year about 40% of taxpayers have a major life event such as marriage, job loss or retirement. ... Awareness can lead to smarter tax planning as well. ... To be sure, not all life changes bring tax savings. Newlyweds can face marriage-tax penalties. Unemployment benefits are taxable, even if there is no withholding.

WSJHere are some often-overlooked tax effects of major life changes. Perhaps they will lower your tax bill for 2012 or 2013.

  • Marriage
  • Divorce
  • Birth and Adoption
  • Change of Employment
  • A New Business
  • Disasters
  • Change of Household
  • Medical Expenses
  • Retirement
  • Death

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