Monday , 28 July 2014
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Five Milestones that Change Your Tax Situation

Taxes fluctuate for taxpayers due to three areas – income, filing status and possible tax credits and deductions – and often occur when you reach the following milestones.

Landing your first job

Seeing how much is taken out of paychecks for taxes can be surprising to those working their first job. But, getting the money back that was withheld for taxes is a possibility.

Even individuals who are not required to file qualify for tax benefits and should consider filing a return to see if they are able to recover taxes withheld and claim tax benefits they qualify to claim.

Buying a house or relocating

Homeowners can deduct real estate taxes and mortgage interest as itemized tax deductions. However, if your itemized deductions are less than your standard deduction, you should use the standard deduction.

The expenses of relocating to a new job may be deductible for homeowners and renters, under certain conditions.

Getting married

Generally, married taxpayers file a joint return because of the added tax benefits. But, filing separately can sometimes lower a tax bill.

Becoming a parent

Potential tax breaks for parents include a $3,900 dependency exemption, claiming a credit based on up to $6,000 in child care expenses (for two or more children) and claiming up to $1,000 per child for the Child Tax Credit.

For tax year 2013, the Adoption Credit can be claimed for up to $12,970 of qualified adoption expenses.

Retiring

Did you happen to turn 59½ last year? Generally, you have to pay a 10 percent penalty if you take money out of your IRA early, but after you reach this milestone distributions are not considered early.

Exactly 11 years later when you turn 70½ you will have to start taking distributions from your IRA.

Talking with a tax professional about your individual situation can help ensure you get all the tax breaks you qualify to claim.

For information about filing an accurate tax return, contact Gregory Itenberg, tax advisor 2 and a registered tax return preparer. H&R Block office is located at 1680 NE Miami Gardens Dr., Miami Gardens. Call 305-940-5281 or visit www.hrblock.com.