Marriage Divorce Kids & Taxes
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Getting married, divorced, or giving money to family or friends all impact your taxes. While you might not think about tax time when you’re planning your wedding, going through a divorce, or giving someone money, you should.
Here are some tips to help you through these situations that can help at tax time.
Get Divorced after December 31
If you’re thinking about divorce near the end of the year, wait until after December 31. Here’s why.
According to the IRS, you are married for the entire year if you’re married on December 31. Since there are more advantages for married filing jointly taxpayers, why not take advantage of it for one more year before the divorce goes through?
Get Married before December 31
Just like you should get divorced after December 31, so you get the married filing jointly status for the tax year, the same is true fo getting married.
If you get married before or even on December 31, you’re considered married for the entire year. This could work to your advantage. If you’d like to see the differences, I’d be happy to help you see how much you might save if you got married even on the last day of the year.
Stay Single and Enjoy $2 million in Mortgage Deductions
Mortgage interest is one area that it pays to be single. Here’s why.
When you’re single but own a home with someone else, you both get to deduct interest on loans up to $750,000 for a total of $1.5 million in interest deductions. If you’re married, though, that number gets cut in half, meaning you can only deduct interest on the first $750,000 in mortgage debt.
Put your Children on your Payroll
Do you own a business and do your children work for you? If so, put them on your payroll. Here’s why.
You and your child won’t pay payroll taxes on any money your child earns. If your child also sets up an IRA, he/she can defer all federal tax liabilities on up to $18,550 in income.
Use the 0 Percent Tax Bracket to your Advantage
If you have a loved one in the 0 percent capital gains tax bracket (has less than $40,400 in taxable income as a single person or $80,800 as a couple), you can gift them appreciated assets instead of cash and avoid the taxes.
Let’s say for example you give your elderly mom tax you bought for $1,000 that’s now worth $10,000. You just gave your mom tax-free $10,000 and it only cost you $1,000 when you bought it plus neither of you pay taxes on the capital gains.
Tax season can get complicated, but we’re always here to help. If any of these situations are something you’re experiencing or you have any other questions about your taxes, call us today at 714-383-2307. We’re happy to help!