| Ferris Bueller said that "Life moves pretty fast. If you | | | | care expenses. |
| don't stop and look around once in a while, you could | | | | Your Kid's off to College |
| miss it." Well, the IRS won't miss out on your life and | | | | If your child is a full-time student, you can claim him |
| whatever changes may be at the forefront. | | | | her as a dependent until the age of 24 unless your |
| Whenever you make a huge life transition-whether | | | | child takes a personal exemption on his/her own tax |
| you get married or you retire-your taxes will be | | | | return. |
| affected. Read below to find out what kind of tax | | | | You are also able to claim the Lifetime Learning |
| changes you should expect. | | | | Credit of up to $2,000 for qualified tuition and related |
| You Are Getting Married | | | | expenses paid at an eligible educational institution. |
| If you get married by December 31st, you are | | | | Another credit, the American Opportunity Tax Credit, |
| considered married for the whole year on your taxes. | | | | allows you to deduct up to $2,500 for tuition paid for |
| The standard deduction for married filing jointly is | | | | the first 4 years of college. However, you can't claim |
| $11,400 for 2009. For married couples filing | | | | both credits in the same year for the same child. |
| separately, the standard deduction is $5,700. If you | | | | For those taxpayers paying off their student loans, |
| are single and not head of household, your standard | | | | you can deduct up to $2,500 of student loan interest |
| deduction is $5,700. If you are head of household, | | | | as an adjustment to income. |
| your standard deduction is $8,350. | | | | You Are Getting Divorced |
| Filing separately disqualifies you for some major | | | | If you became divorced or legally separated before |
| credits and deductions, including: | | | | December 31, you are considered unmarried for the |
| - Earned Income Credit | | | | entire year for tax purposes. |
| - Child and Dependent Care deductions (see below) | | | | Whoever the kids lived with longer during the year |
| - American Opportunity and Lifetime Learning credits | | | | gets to claim them and the $3,650 exemption per |
| (see below) | | | | child. The parent who claims the dependent |
| - Student loan interest deduction | | | | exemption also has the right to claim the Child Credit |
| Note: A spouse can never be claimed as a dependent | | | | or aforementioned education credits. |
| even if he/she had no income. When newly married, | | | | If you're receiving alimony, you have to report it as |
| each spouse should change their W-4 form to reflect | | | | income and pay taxes on it; however, child support |
| his/her change in filing status. | | | | has no affect on your taxes (or your ex's). It doesn't |
| You Are Buying a House | | | | count as income, so it's not deductible. |
| Buying a home is a big step in your life-and in your | | | | When newly divorced, make sure to change your |
| finances. Your taxes will also reflect the changes of | | | | W-4 form to reflect your new filing status. |
| becoming a homeowner. | | | | You Are Retiring |
| Mortgage interest and real estate taxes paid on your | | | | Pensions and annuities are generally taxable when |
| home are tax-deductible. In addition to mortgage | | | | distributed. |
| interest, you can also deduct: | | | | When receiving your pension, make sure to have |
| - Property taxes | | | | taxes withheld, or you will need to make quarterly |
| - Private Mortgage Insurance payments | | | | payments so you won't become subject to the |
| - Purchase points | | | | penalty for underpayment of estimated tax. |
| - Home improvements for medical reasons | | | | If half of your Social Security benefits plus your |
| - Mortgage interest on a second home | | | | other income exceeds $32,000 for filing jointly (or |
| If you purchased a home for the first time before | | | | $25,000 for all other filing statuses), a portion of your |
| December 1, 2009, you may qualify for the first-time | | | | benefits could be taxable. |
| homebuyer credit of up to $8,000. | | | | If you are 65 or over and are below certain income |
| When you sell a home that you owned and lived in | | | | limits, you may be eligible for a nonrefundable credit |
| for at least 2 of the last 5 years, the gain on the sale | | | | for the elderly or the disabled. |
| of up to $250,000 is not taxable. | | | | Your Loved One Dies |
| You Are Having (or Adopting) a Baby | | | | In 2009, an individual can give up to $13,000 (in either |
| If your child was born (or adopted) before | | | | cash or property gifts) during the year to any other |
| December 31 then he/she is assumed, for tax | | | | individual tax-free without the recipient reporting the |
| purposes, to have lived with you the entire year. | | | | gift as income. For any amount over $13,000, the |
| For each child, you can claim a dependent's | | | | donor must file a gift tax return and any gift tax is |
| exemption of $3,650. For each child under the age of | | | | the donor's responsibility. Certain inherited property, |
| 17, you may also be eligible for up to a $1,000 child | | | | such as IRAs and pensions, are taxable when |
| tax credit. | | | | distributed to the beneficiary. Also, if your loved one |
| You may be able to take a tax credit for qualifying | | | | left an estate more than $3.5 million you will need to |
| expenses up to $12,150 paid to adopt a child. And, if | | | | pay estate taxes. |
| you adopt a "special needs" child, you can claim the | | | | The chore of filing the taxpayer's final return falls to |
| full credit even if you spend less than $12,150 on | | | | the executor or administrator of the estate. |
| adoption fees. | | | | If your spouse dies, you may file a joint return for |
| You can also qualify for the Childcare Credit. If you | | | | the year of death, claiming the full standard deduction |
| pay for childcare so you can work, you can earn a | | | | and using joint-return rates. |
| credit of $600 to $1,050, depending upon your child | | | | |