How Major Life Changes Affect Your Taxes (Hint: You’re Going to Like It)

Major life changes and taxes—like getting married, moving, or having a baby—are exciting milestones that often come with significant financial adjustments. But here’s some good news: these events can also provide valuable tax benefits. Understanding how to navigate these opportunities can help you keep more money in your pocket during life’s most transformative moments.

At Molen & Associates, we’ve been helping individuals and families optimize their tax strategies for over 40 years. Here’s how major life changes can impact your taxes—and the benefits you can claim.

Getting Married? Here’s What to Know About Tax Savings

Marriage is a joyful celebration, but it often comes with added expenses like buying a home, furnishing it, and merging finances. Fortunately, tying the knot can also bring significant tax advantages.

Benefits of Married Filing Jointly

Once you’re married, you can choose to file your taxes as married filing jointly, which typically results in a lower tax liability than filing separately. Key benefits include:

• Higher Standard Deduction: For 2024, single filers receive a standard deduction of $14,600, while married couples filing jointly can claim $29,200.
• Larger Tax Brackets: Married couples enjoy higher income thresholds before hitting higher tax rates.

Tip: Even if you get married on December 31, the IRS considers you married for the entire year.

Moving? Don’t Forget These Deductions

Relocating for a new home or job can be costly, but some home-related expenses may offer tax relief, especially if you itemize your deductions.

Key Deductions for Homeowners

• Mortgage Interest: Deductible for mortgages up to $750,000.
• Property Taxes: Deduct up to $10,000 in combined state and local property taxes and income or sales taxes.

Important Note: The deduction for moving expenses is generally unavailable unless you are an active-duty military member relocating due to orders.

Having a Baby? Tax Benefits for Parents

Welcoming a new child is life-changing, and the IRS offers several credits and deductions to ease the financial burden of raising a child.

Child Tax Credit (CTC)

• Worth up to $2,000 per child under 17.
• Refundable up to $1,700, meaning you can receive part of the credit as a refund even if you owe no taxes.
• Income limits: Phases out for incomes above $400,000 (married filing jointly) or $200,000 (single).

Child and Dependent Care Credit

• Helps offset childcare costs for children under 13 or other dependents who cannot care for themselves.
• Credit is worth up to $1,050 for one child or $2,100 for two or more children, covering up to 35% of qualifying expenses.
• Qualifying expenses: Up to $3,000 for one child and $6,000 for two or more.

Tip: The credit percentage decreases as income rises but remains at a minimum of 20%.

Other Major Life Events to Consider

Starting a New Job or Retiring

• Job Expenses: While unreimbursed work expenses are no longer deductible for most taxpayers, military reservists and some other categories may still claim these deductions.
• Retirement Contributions: Contributions to a 401(k) or IRA can reduce your taxable income while helping you save for the future.

Divorce or Separation

• Filing status may change to single or head of household.
• Alimony payments made under agreements finalized before 2019 remain deductible, but those from newer agreements are not.

How Molen & Associates Can Help (Major life changes and taxes)

Major life events often bring both emotional and financial challenges. At Molen & Associates, we specialize in helping individuals and families navigate these changes while maximizing their tax benefits. Our services include:

• Tax Planning: Tailored strategies to optimize deductions and credits.
• Filing Assistance: Expert preparation for married couples, new parents, homeowners, and more.
• Year-Round Support: Guidance through every stage of life’s big moments.

Make the Most of Your Life Changes

Life is full of changes, and many come with financial implications. Knowing how to claim tax benefits can help you stay ahead and keep more of your hard-earned money.

Call Molen & Associates today at 281-440-6279 to schedule a consultation, or visit our website to learn more about our services. Let us help you turn life’s milestones into tax-saving opportunities.