As much as we would like to have complete and total control over everything that happens in our lives, that’s just not how the world works. But that’s not to say we can’t keep some amount of control over certain aspects of life. So, while we can choose to buy a house or start a business, what we can’t control are happenings like the death of a loved one or needing to care for an aging parent.
As your life changes, what you can and cannot claim on your taxes is likely to shift. Let’s take a look as some major life events that will impact your tax planning in Sacramento, CA:
- Retirement: You’ve worked most of your life, and now you’re ready to retire from the daily grind. No more filing taxes, right? Well, there are some cases in which a retired person may receive more money than just monthly Social Security payments. These are the retired folks receiving regular distributions through qualified retirement plans, or who have decided to withdraw everything from various retirement accounts. If you no longer work as an employee but earn income in another way, you’ll want to talk to a CPA about how this can impact your taxes.
- Caring for elderly parents: This can seem confusing—especially if your brain is not tax savvy—but with the right decisions during your tax planning in Sacramento, CA you can claim an elderly parent on your taxes. Before you can do this, your parents’ gross income and the total amount of yearly financial support you provide to them will be closely examined. Whether you’ll be claiming the dependent care credit or not, there is a deduction available for the amount of out-of-your-pocket medical expenses based on your adjusted gross income.
- Death of a spouse: Should your spouse pass away, you retain the option of either filing as married filing jointly or married filing separately for the year your spouse died. But the year of death is the last year you will be able to file a joint income tax return. If you have children you can still claim as dependents and you have not remarried, ask your tax preparer about how to file as a qualifying widow or widower, and how long you can do so.
- Starting a small business: For help with managing startup costs and funds for marketing and advertising—and later payroll services and employee benefit plans—you may want to consider hiring a certified public accountant to advocate for your new business. This is an especially good investment in the early stages of your business. A financial advisor can make sure that your bookkeeping is correct, ensure employees are getting paid, file away all necessary paperwork for each tax year and advise you on things that involve your business’s finances.
Have you experienced a major event in your life? Anything that presents itself as a change that requires you to do your taxes a little bit differently than before can be intimidating and confusing. For help with tax planning in Sacramento, CA, contact the professionals at Yoder & Co., CPA today.