How to report major life changes to the IRS

If you got married, had a baby, went through a divorce, picked up a side gig or were widowed in 2016, there was a lot to keep track of. One of the biggest items is to tell the IRS.

In all of those situations, there are important tax consequences to your return. Here’s a look at what to do before April 18, this year’s filing deadline:

You got married

Love is a wonderful thing, even according to Uncle Sam. For those who tied the knot last year (right up until Dec. 31), there may be substantial benefits for your taxes.

In general, many couples get a tax break for being married. “Marrying, filing jointly, is the best overall status from a tax point of view,” according to Gil Charney, director at The Tax Institute at H&R Block.

For starters, you’ll both get to take the personal exemption — a $4,050 benefit — which reduces your taxable income by that amount if you file jointly, Charney said. You also will be able to combine incomes in order to boost contributions to an IRA or a charity and take a deduction.

(Note: Some taxpayers, particularly high-income couples, could be subject to a marriage penalty, meaning that they pay more in taxes than if they were each single.)

Also, be sure to contact the Social Security Administration as well as the IRS so that your records match, and change your W-4 withholding at work from single to married.

You had a baby

That little bundle of joy also has tax benefits. If you had a child last year, you qualify for a dependent exemption of $4,050, even if you just welcomed your baby on Dec. 31.

There are other benefits as well, such as the Child Tax Credit worth $1,000 for each child, the Child and Dependent Care Credit worth up to $3,000 for one dependent and $6,000 for two or more (if both parents are working) in addition to the Earned Income Tax Credit. That could mean cash back of up to $6,269 for taxpayers with three or more children and low-to-moderate income.

Again, make sure to have your child’s new Social Security number for your tax forms.

You can read the other half of this article on CNBC here: http://cnb.cx/2mfM0VI

2017-03-02T22:54:47+00:00

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