From Taxes to Budgets: An Accounting Blog

Posted on: 27 July 2023

You can prepare your taxes yourself. Unfortunately, tax software has its limitations. You should seek tax prep services if you have any complexities on your tax return. This way, you can maximize your chances of getting what you deserve while minimizing your chances of making errors. Furthermore, you can get helpful advice for future tax returns. Life-changing events are excellent examples of the complexities you can run into. As such, you should always seek tax prep if you've experienced one in the tax year.

What Are Some Life-Changing Events You Should Seek Tax Prep Services For?

Here are three life-changing events that become much easier to report through professional tax preparation:

You Got Married

Getting married has enormous consequences for your tax return. For instance, you can file your taxes jointly rather than separately. Generally, married couples file their taxes jointly because that gives them more credits and deductions. However, there are times when married couples should file their taxes separately. The classic example is when one spouse doesn't want responsibility for the other's tax liability. Another example is when one spouse has a much lower income, meaning they can claim more credits and deductions if they file separately. A professional can help you determine the best way to file for you and your spouse.

You Got Divorced

If you got divorced, you might have to resolve some messy tax-related questions. One of the most common examples is determining which parent claims their child as a dependent because only one parent gets to do so. The IRS says a parent can claim their child on their tax return if they're the custodial parent. That means the child has spent more nights with them than their ex-spouse during the tax year. If the child has spent the same number of nights with both parents, the IRS says the one with the higher adjusted gross income is the custodial parent. This seems clear. Sadly, exceptions can exist. Due to this, you should consult tax prep before your divorce to prepare for the changes to your tax return ahead of time.

You Have a New Child

If you have a new family member, you should ask a professional about what that means for your tax return. The Child Tax Credit is the best-known example. However, you might have other credits and deductions related to your kids. In particular, you'll want to ask about education and education savings, which are heavily incentivized.

Contact a local tax prep service to learn more.