What you need to know when filing your taxes after a major life event

February 21, 2024

Getting married, having a baby and buying a home are some of the most joyous moments in life, but these big events could mean you need to change how you file your taxes.

Benjamin Franklin famously wrote that nothing is certain “except death and taxes.” It’s also true that your life will constantly be changing. And major events are likely to impact how you file your taxes. For example, when you grow your family, buy a house or change careers, what rules apply? And are there new ways to potentially cut your tax bill?

Here’s what to keep in mind when you file your taxes after a major milestone:

Saying “I do”

Congratulations on your wedding! As a married person, there are lots of ways to build your financial life together, taxes are just one part.

•  When it comes to your filing status, you have two choices: married filing jointly or married filing separately. It’s an important decision because your filing status helps determine what credits and deductions you may qualify for and how much you’ll owe in taxes.

•  Most married couples file jointly, but there are a few times when filing separately might make more sense. These include if one spouse has a lot of medical expenses or if either of you has an income-driven repayment plan for student loans.

Welcoming a child

Wonderful news! The arrival of a child means you may qualify for certain tax credits — and credits are especially valuable since they cut your tax bill dollar-for-dollar.

•  The child tax credit is worth $2,000 for every dependent child you have under the age of 17. At higher incomes, the credit is decreased and eventually phased out.

•  If you pay for child care — daycare or pre-school, for example — you may be able to claim the child and dependent care credit. Depending on your income, this credit is worth 20 to 35% of qualified expenses up to $3,000 for one child under age 13, or up to $6,000 for two or more children under the age 13.

•  For families with low or moderate income, the earned income tax credit is available. As your family size grows, the income limit also goes up. For example, in 2023, a married couple with three children and an adjusted gross income of $63,398 could receive up to $7,430 in credits.

•  To claim tax benefits, children must have a Social Security number, so make sure to apply for one right away.

Getting divorced

A lot of things change when a marriage ends, including how you file your taxes.

•  In addition to changing your filing status, divorce can affect your eligibility for certain deductions and credits.

•  Typically, the parent with custody of the child can claim them on their taxes. If custody is split 50/50, then the parents must agree who gets to claim the child as a dependent or IRS tie-breaker rules come into play.

•  For any divorce or separation agreements signed in 2019 or later, alimony payments are no longer deductible by the spouse who pays them and they no longer count as income for the spouse who receives them.

•  If you’re getting divorced and changing your name, make sure to notify the Social Security Administration so your tax return and SSA records match.

Buying a home

It’s an exciting – and expensive – milestone moving into a new home, so, make sure you know what deductions are available.

•  If you take the standard deduction on your taxes, becoming a homeowner is a good time to do the math to see if itemizing your taxes will save you more money.  

•  One of the biggest tax breaks comes from deducting your mortgage interest and property taxes from your taxable income. Your lender will send you a 1098 form in January that shows the interest you paid on your loan. As for property taxes, the deduction for state and local taxes — which includes property taxes — is capped at $10,000.

•   If you take a home equity loan or line of credit, that interest may also be deductible — but only if you use the funds to “buy, build, or substantially improve” your home, according to the IRS. If you tap your home equity to pay off credit cards or cover college tuition, the interest is no longer deductible.

Selling a home

If you made a profit on the sale, great news! But does that mean a big tax bill on the gain?

•  You won’t necessarily have to pay tax on capital gains — the difference between what you paid for your home, plus the cost of major improvements, and the price you sold it for — if that amount is $250,000 or less if you are single and $500,000 for couples filing jointly. This exclusion applies only if you owned and lived in the home for two out of the five years before the sale.

•  If you sell for less than you paid for your home, however, you cannot deduct that loss unless you used the home for business.

Starting a new job or getting a promotion

Changing jobs is an exciting milestone — and one that involves several important decisions that can have an impact on your taxes.

•  With any new job you’ll likely need to fill out a Form W-4 so your employer knows how much tax to withhold from your paycheck.

•  Whether you’re starting a new job or you got a big promotion, an increase in salary could put you in a higher tax bracket. You can see what you’ll likely pay with IRS’s Tax Withholding Estimator tool.

•  If your new employer offers a 401(k) or other tax-advantage account, you’ll want to consider signing up (if you’re not automatically enrolled) and decide how much you want to contribute. These contributions come with tax deductions.

•  Your health insurance could also provide tax benefits. If you sign up for a high-deductible health plan you can also contribute to a health savings account. The money you contribute is pre-tax, the account grows tax-free, and withdrawals for qualified medical expenses are tax-free, too.

Getting ready for retirement

This is the milestone you’ve been working toward. Enjoy this time in your life – you earned it.

•  Once you start collecting Social Security, keep in mind that up to 85% of your benefits could be subject to federal income taxes, depending on your overall income.

•  In retirement, withdrawals from traditional IRAs and 401(k) plans and other qualified retirement accounts are taxed as ordinary income. Withdrawals from Roth IRAs and Roth 401(k)s are tax-free. See how these different accounts work.

•  When you sell investments that you’ve owned for more than a year, you owe capital gains taxes on your long-term gains, and that rate may be lower than your top income tax rate.

Other life moments can affect your finances – and your taxes -- like whether you have educational expenses, had an inheritance or if you’re handling the estate of someone who has died. In each case understanding the rules and staying informed about how life events can affect your taxes is crucial.

With careful planning and the right resources, you can confidently manage your tax return now and in the coming years.

Explore more with our Tax Resource Center. Getting a tax refund or bonus? We’ve got tips on how to make that money work harder for you.

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What to do with your tax refund or bonus

Live your money values in 2024

Loud budgeting explained: Amplify your money talk

How to set financial goals you will keep

Financial goals for 2024 a 12-month planning guide

How to save for a dream vacation

Tips for talking about money when friends earn more

How new parents can prepare for the costs of a new child

How to save more money in 2024

Building confidence in your finances and career

How to financially prepare for pet costs

Pros and cons of a personal line credit

3 tips for saving money when moving to a new home

5 ways to maximize your garage sale profits 

Tips for handling rising costs from an Operation HOPE Financial Wellbeing coach

What is a Certificate of Deposit? And what to know before opening an account

What does FDIC mean?  

Is raising backyard chickens a good idea financially?

3 financial tools to help automate your finances

5 things to deinfluence in your finances

3 ways to keep costs down at the grocery store (and make meal planning fun)

5 tips for creating (and sticking to) a holiday budget

Make holiday gift giving easier in a digital world

Should you buy now, pay later?

Financial checklist: Preparing for military deployment

How to financially prepare for a military PCS

Planning self-care moments that matter (and how to finance them)

Friction: How it can help achieve money goals

5 things to consider when deciding to take an unplanned trip

Stay committed to your goals by creating positive habits

An eco friendly debit card with roots in Haiti

Creating positive money habits

Finding a side gig to fund your goals

How I kicked my online shopping habit and got my spending under control

Growing your savings by going on a ‘money hunt’

Working with an accountability partner can help you reach your goals

The banking app you need as a new parent

Why a mobile banking app is a ‘must have’ for your next vacation

How to decide when to shop local and when to shop online

A who’s who at your local bank

Webinar: 5 myths about emergency funds

How I did it: Learned to budget as a single mom

Your guide to starting a job: Resources to help along the way

Your 5-step guide to financial planning

How to set yourself up for success in your first job

5 myths about emergency funds

Financial Wellness Assessment

How to stay positive when searching for a job

Banking basics: How to start saving

Webinar: Common budget mistakes (and how to avoid them)

Does your savings plan match your lifestyle?

Mobile banking tips for smarter and safer online banking

Uncover the cost: Wedding

Uncover the cost: International trip

What military service taught me about money management

Are savings bonds still a thing?

Tips to overcome three common savings hurdles

Booming in the gig economy: A new chapter leveraging 45 years of experience

Adulting 101: How to make a budget plan

How having savings gives you peace of mind

Helpful tips for safe and smart charitable giving

Personal loans first-timer's guide: 7 questions to ask

3 awkward situations Zelle can help avoid

Allowance basics for parents and kids

What’s your financial IQ? Game-night edition

Mindset Matters: How to practice mindful spending

How and when to ask for a raise

How to save money while helping the environment

How to choose the right rewards credit card for you

How can I help my student manage money?

Steer clear of overdrafts to your checking account

How to manage money in the military: A veteran weighs in

Things to know about the Servicemembers Civil Relief Act

You can take these 18 budgeting tips straight to the bank

3 tips for saving money easily

Save time and money with automatic bill pay

How to best handle unexpected expenses

Common unexpected expenses and three ways to pay for them

Stay on budget — and on the go — with a mobile banking app

Which is better: Combining bank accounts before marriage — or after?

Do you and your fiancé have compatible financial goals?

U.S. Bank asks: Transitioning out of college life? What’s next?

U.S. Bank asks: Do you know your finances?

U.S. Bank asks: Do you know what an overdraft is?

Personal finance for teens can empower your child

Is it time to get a shared bank account with your partner?

It's possible: 7 tips for breaking the spending cycle

How to save for a wedding

How can you pay bills online the right way?

Here’s how to create a budget for yourself

Don’t underestimate the importance of balancing your checking account

9 simple ways to save

7 steps to prepare for the high cost of child care

A passion for fashion: How this student works the gig economy

Earning in the gig economy: Gladys shares her story

By the numbers: The gig economy

Tips for working in the gig economy

How compound interest works

Dear Money Mentor: How do I set and track financial goals?

5 tips for parents opening a bank account for kids

5 reasons why couples may have separate bank accounts

Checking and savings smarts: Make your accounts work harder for you

Lost job finance tips: What to do when you lose your job

Money Moments: 3 smart financial strategies when caring for aging parents

Tips to raise financially healthy kids at every age

Money management guide to financial independence

First-timer’s guide to savings account alternatives

Money Moments: 8 dos and don’ts for saving money in your 30s

7 financial questions to consider when changing jobs

Tips and resources to help in the aftermath of a natural disaster

Myths vs. facts about savings account interest rates

30-day adulting challenge: Financial wellness tasks to complete in a month

5 tips to use your credit card wisely and steer clear of debt

Travel for less: Smart (not cheap) ways to spend less on your next trip

Money Moments: How to manage your finances after a divorce

Money Moments: 3 tips for planning an extended leave of absence

Overdrafts happen: Steps to get you back on track

What’s in your emergency fund?

Certificates of deposit: How they work to grow your money

P2P payments make it easier to split the tab

Essential financial resources and protections for military families

What you need to know about renting

Dear Money Mentor: How do I pick a savings or checking account?

Real world advice: How parents are teaching their kids about money

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

6 ways to spring clean your finances and save money year-round

Meet the student with a passion for science, helping others and reaching goals

What I learned from my mom about money

How to cut mindless spending: real tips from real people

Understanding guardianship and power of attorney in banking

How to increase your savings

Bank from home with these digital features

What financial advice would you give your younger self?

Military finance: How to create a family budget after military service

Managing money as a military spouse during deployment

How I saved $10,000 in just one year

Discovering your money personality can help you save

Tips on how couples can learn to agree about money

Your guide to smart money habits

Understanding your military GI Bill benefits

Webinar: How to pay for college

How grandparents can contribute to college funds instead of buying gifts

How to open and invest in a 529 plan

Using 529 plans for K-12 tuition

Your financial aid guide: What are your options?

Is a home equity loan for college the right choice for your student

Parent checklist: Preparing for college

How to apply for federal student aid through the FAFSA

What to consider before taking out a student loan

How I did it: Dug my way out of a five-figure student loan debt

Are you ready to restart your federal student loan payments?

Consolidating debts: Pros and cons to keep in mind

How to talk to your lender about debt

Which debt management technique is right for you?

Everything you need to know about consolidating debts

Managing debt

Best travel credit card perks for family vacations

5 tips to use your credit card wisely and steer clear of debt

5 steps to selecting your first credit card

How to use debt to build wealth

What’s a subordination agreement, and why does it matter?

Understanding the true cost of borrowing: What is amortization, and why does it matter?

7 steps to keep your personal and business finances separate

Know your debt-to-income ratio

How to pay off credit card debt

How to use credit cards wisely for a vacation budget

Your quick guide to loans and obtaining credit

Dear Money Mentor: How do I begin paying off credit card debt?

Checklist: 10 things to look for when touring a home

How to sell and buy a home at the same time

Mortgages after retirement: Here’s what to know

Dear Money Mentor: What is cash-out refinancing and is it right for you?

Home improvements with the best ROI

Overcoming high interest rates: Getting your homeownership goals back on track

How we did it: Converted to solar power

Is it cheaper to build or buy a house

PCS moving checklist for military spouses and families

For today's homebuyers, time and money are everything

Crypto + Homebuying: Impacts on the real estate market

Should you buy a house that’s still under construction?

How I did it: Bought my dream home using equity

Buying a home Q&A: What made three homeowners fall in love with their new home

House Hacks: How buying an investment property worked as my first home

Starting your homebuying journey

Managing the impacts of appraisal gaps in a hot housing market

How I did it: Built living spaces to support my family

Spring cleaning checklist for your home: 5 budget-boosting tasks

Bringing economic opportunity to underserved communities one home at a time

Community activist achieves dream of homeownership

Saving for a down payment: Where should I keep my money?

Your guide to breaking the rental cycle

DIY home projects 101: tips from a first-timer

Checklist: 6 to-dos for after a move

What are conforming loan limits and why are they increasing

Military homeownership: Your guide to resources, financing and more

Uncover the cost: Building a home

How I did it: Bought a home without a 20 percent down payment

The lowdown on 6 myths about buying a home

Home buying myths: Realities of owning a home

4 ways to free up your budget (and your life) with a smaller home

Get more home for your money with these tips

Money Moments: Tips for selling your home

Money Moments: How to finance a home addition

How I did it: My house remodel

Are professional movers worth the cost?

First-time homebuyer’s guide to getting a mortgage

Dear Money Mentor: When should I refinance a mortgage?

Beyond the mortgage: Other costs for homeowners

Quiz: How prepared are you to buy a home?

What is a mortgage?

Building a dream home that fits your life

10 ways to increase your home’s curb appeal

10 questions to ask when hiring a contractor

5 things to avoid that can devalue your home

How you can take advantage of low mortgage rates

What is an escrow account? Do I have one?

Is it the right time to refinance your mortgage?

What to know when buying a home with your significant other

What is refinancing a mortgage?

These small home improvement projects offer big returns on investment

Should you get a home equity loan or a home equity line of credit?

Mortgage basics: What’s the difference between interest rate and annual percentage rate?

Mortgage basics: What is refinancing, and is it right for you?

Mortgage basics: Prequalification or pre-approval – What do I need?

Mortgage basics: How much house can you afford?

Mortgage basics: How does your credit score impact the homebuying experience?

Mortgage basics: Finding the right home loan for you

Mortgage basics: Buying or renting – What’s right for you?

Mortgage basics: 3 key steps in the homebuying process

Is a home equity line of credit (HELOC) right for you?

How to use your home equity to finance home improvements

How does a home equity line of credit (HELOC) work?

How do I prequalify for a mortgage?

Home equity: Small ways to improve the value of your home

Can you take advantage of the dead equity in your home?

8 steps to take before you buy a home

6 questions to ask before buying a new home

4 questions to ask before you buy an investment property

10 uses for a home equity loan

Uncover the cost: Home renovation

How to request a credit limit increase

What applying for store credit card on impulse could mean

Improving your credit score: Truth and myths revealed

How to spot a credit repair scam

6 essential credit report terms to know

5 unique ways to take your credit card benefits further

How to maximize your credit card rewards

Myth vs. truth: What affects your credit score?

Test your loan savvy

Decoding credit: Understanding the 5 C’s

Credit: Do you understand it?

How to build and maintain a solid credit history and score

Should you give your child a college credit card?

U.S. Bank asks: What do you know about credit?

What types of credit scores qualify for a mortgage?

What is a good credit score?

Credit score help: Repairing a bad credit score

How to improve your credit score

Common questions about electric vehicles (EVs)

What to keep in mind when buying a used car from a private seller

I own two electric vehicles. Here’s what I’ve learned about buying and driving EVs.

How I decided that buying an RV was worth it for me

Car shopping: Buying versus leasing your next vehicle

Take the stress out of buying your teen a car

How to winterize your vehicle

Questions to ask before buying a car

What you should know about buying a car

When to and benefits of refinancing a car loan

How to choose the best car loan for you

What you need to know before buying a new or used car

Disclosures

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.