Tax planning is the process of organizing and filing your tax returns to the IRS. Typically, this involves gathering documents that are provided by your employers along with your personal information. However, if major life changes happen during the tax year, this can impact your taxes.
Marcus, Fairall, Bristol + Co., PLLC, is El Paso’s trusted accounting firm. We are able to provide El Paso residents with tax planning services for businesses and individuals. If you’re feeling overwhelmed by the upcoming tax season, don’t be. Just contact us online or call (915) 775-1040 for further assistance!
Having a Child
A new baby brings a lot of joy into your life—and for your taxes. A new baby means you get to take advantage of new tax breaks, such as claiming your child as a dependent and, if you’re eligible, an additional child tax credit during your tax preparation. However, this is dependent on your income. If you are a low to middle-income earner, you may also qualify for an Earned Income Credit (EIC), which reduces your Social Security taxes.
Additionally, if you are a single partner, you may be able to file as Head of Household, bringing in more tax benefits than if you were filing as single.
Marriage
If you’ve gotten married recently first, congratulations! Secondly, this means you have two options during tax preparation: Married Filing Jointly or Married Filing Separately. When filing jointly, your tax bracket may be lower than if you were filing as a Single. However, prior to filing, be sure all of your legal documentation, such as a Social Security Card, bank account, insurance, and driver’s license, are all updated with your married name.
Divorcing
A divorce means a lot of change, both in your personal life and your tax life. Similarly, if you are providing alimony or child support or had to settle property, this all needs to be reflected on your tax return. Fortunately, child support is tax neutral which means your taxes will not be affected by this. It’s important to note that if children are involved, only one parent can claim your child(ren) as dependants—if you are not filing jointly.
New Job
When you start a new job, one of the many pieces of paper you have to fill out is a W-4. Be sure to check your withholding percentages to ensure your new job is taking out the correct amount of money per paycheck to avoid having to pay the IRS at the end of the year.
Similarly, if you pick up a second job or you’re a freelancer, your income will likely change. For freelancers, you may be able to write off business-related expenses like a home office, mileage, and equipment, so long as the expenses are ordinary and necessary for your job.
Losing Your Jobs
If you lose your job, you may find yourself in a lower tax bracket with eligibility for credits and deductions and need to perform tax preparation differently. However, if you qualify for unemployment benefits, remember that these benefits are still taxable. You will need to file a tax return through Form 1099-G.
Tax Planning Services in El Paso
If you’re looking for tax planning services, look no further than Marcus, Fairall, Bristol + Co., PLLC. We offer free consultations to all new clients, so call (915) 775-1040 today!