When Life Changes, So Do Your Taxes

Marriage, divorce, welcoming a child. These are some of life’s biggest moments. They shift how you live, love, and plan for the future. But they also shift something a little less sentimental: your tax situation.

Understanding how these transitions affect your taxes can help you avoid surprises and make the most of potential benefits. Here’s a breakdown of what to keep in mind as life evolves.

 

Having or Adopting a Child

Few changes are bigger (or busier) than adding a new member to your family. The good news? There are tax breaks that can help lighten the financial load.

  • Child Tax Credit: You could receive up to $2,000 per qualifying child.
  • Child and Dependent Care Credit: If you’re paying for childcare so you can work, you may qualify for an additional credit.
  • Head of Household Status: Unmarried parents who support a child might benefit from this more favorable filing status.
  • Adoption Credit: Adoptive parents can claim up to $16,810 in qualified adoption expenses if you have a valid Social Security number or adoption taxpayer ID.

Each of these can make a meaningful difference at tax time.

 

Getting Married

If you’re married by December 31, the IRS considers you married for the entire year — which means you’ll need to decide how to file: jointly or separately.

  • Joint filing often results in better tax brackets and more deductions.
  • Separate filing can make sense in specific situations (like if one spouse has high medical expenses).

It’s also smart to update your tax withholding if both of you work, so you don’t end up with an unexpected bill or refund next spring.

 

Getting Divorced

If your divorce is finalized by December 31, you’ll file as single or head of household the following year.

  • Head of Household status may apply if you’re supporting a dependent and maintaining a separate home — and it often comes with better tax brackets.
  • Keep in mind: for divorces finalized after 2018, alimony payments are no longer deductible for the payer (and no longer taxable income for the recipient).

 

Life changes fast — your taxes shouldn’t fall behind. Staying proactive helps you take advantage of the benefits available to you and avoid unnecessary headaches come tax season.

And when in doubt? That’s what professionals are for. A little expert guidance can go a long way toward making sure your tax strategy grows and adapts right alongside your life.