Most life events have tax consequences attached to them. Some of them, though are not obvious. Here are six situations to consider.

1. Selling your home isn’t always tax-free. Most homeowners who sell their principle residence qualify to exclude up to $250,000 of gain, or $500,000 for married couples filing jointly. Gains above these limits are generally taxable, but there can be complications. For instance, portions of a property such as a detached office, studio, or other structure not used as part of the residence, may not qualify for the exclusion. And if two single couples are combining homes and selling one of them, you need to keep track of the rules to ensure you can use the full gain exclusion on both homes. And keeping records of home improvements is also important because those costs increase your home’s value which further reduces the gain when you sell.
2. Changing jobs can create an unexpected tax bill. Each employer withholds taxes based on the wages it pays you and the information on your Form W-4. If you work for more than one employer during the year, your total withholding may not fully account for your combined income. Reviewing your withholding after changing jobs or adding a new job can help you avoid an unexpected balance due at tax time. And if moving is involved, the cost of moving expenses are generally no longer deductible, so you may want to negotiate this cost as part of your hiring package. In addition, moving to another state may require filing multiple state tax returns. So plan accordingly.
3. Getting married or divorced changes more than your filing status. These major life events can reshape your entire tax picture, affecting the credits, deductions, and filing options available to you. A different filing status is often just the beginning. Even the timing is important as the tax code assumes you are married for the full year, even if you tie the knot on December 31st!
4. Inheriting money or property comes with its own rules. Many inheritances aren’t considered taxable income for federal purposes the year you receive them, but inherited assets often carry their own tax rules. For example, certain inherited retirement accounts may require taxable withdrawals over a set period, while inherited property generally receives a stepped-up basis (moving from your parent’s or grandparent’s cost to the current fair market value). And remember some states do have an inheritance tax separate from federal rules, so plan accordingly. They are: KY, MD, NE, NJ & PA.
5. Caring for aging parents may open up additional deductions and credits. Supporting an aging parent can sometimes create valuable tax benefits. Depending on your situation, you may qualify to claim a parent as a dependent, deduct certain medical expenses you pay on their behalf, or even claim the Child and Dependent Care Credit if you’re paying for care so you can work.
6. Major medical events and related expenses can lower your taxable income. Large medical expenses can sometimes provide tax relief if you itemize deductions. Costs that exceed 7.5% of your adjusted gross income may qualify, and eligible expenses can include much more than doctor bills, such as certain travel, long-term care, dental treatment, and medically necessary home improvements.

The biggest tax savings aren’t always found in major strategies, but in understanding the rules that apply to everyday life events. When in doubt, a little planning before making a big decision can go a long way. Please call if you have questions about your tax situation.