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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6 questions to ask before buying a new home

What is refinancing a mortgage?

What is an escrow account? Do I have one?

Quiz: How prepared are you to buy a home?

10 questions to ask when hiring a contractor

What to know when buying a home with your significant other

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

What is a home equity line of credit (HELOC) and what can it be used for?

Dear Money Mentor: When should I refinance a mortgage?

Building a dream home that fits your life

Are professional movers worth the cost?

First-time homebuyer’s guide to getting a mortgage

Beyond the mortgage: Other costs for homeowners

How I did it: Bought my dream home using equity

Get more home for your money with these tips

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

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

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

Community activist achieves dream of homeownership

Bringing economic opportunity to underserved communities one home at a time

Managing the impacts of appraisal gaps in a hot housing market

Is it the right time to refinance your mortgage?

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

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

Is it cheaper to build or buy a house

Starting your homebuying journey

Home improvements with the best ROI

PCS moving checklist for military spouses and families

Webinar: Buying a home in 2022: what to expect

Home buying myths: Realities of owning a home

Webinar: 11 insider tips for student debt

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

How we did it: Converted to solar power

How to maximize your credit card rewards

How to use credit cards wisely for a vacation budget

Which debt management technique is right for you?

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

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

10 uses for a home equity loan

Know your debt-to-income ratio

Best travel credit card perks for family vacations

Your guide to breaking the rental cycle

Understanding your military GI Bill benefits

Webinar: How to pay for college

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

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

How to apply for federal student aid through the FAFSA

Things to know about the Servicemembers Civil Relief Act

Should you buy now, pay later?

Steer clear of overdrafts to your checking account

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

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

Tips for working in the gig economy

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

Tips to overcome three common savings hurdles

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

Save time and money with automatic bill pay

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

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

Helpful tips for safe and smart charitable giving

Growing your savings by going on a ‘money hunt’

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

Tips to raise financially healthy kids at every age

How to avoid being the victim of a digital payments scam

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

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

How to financially prepare for a military PCS

How to set yourself up for success in your first job

How to stay positive when searching for a job

Friction: How it can help achieve money goals

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

What to consider before taking out a student loan

Earning in the gig economy: Gladys shares her story

Financial checklist: Preparing for military deployment

Here’s how to create a budget for yourself

Common unexpected expenses and three ways to pay for them

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

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

Are savings bonds still a thing?

3 awkward situations Zelle can help avoid

Allowance basics for parents and kids

9 simple ways to save

Do you and your fiancé have compatible financial goals?

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

What military service taught me about money management

Money muling 101: Recognizing and avoiding this increasingly common scam

From LLC to S-corp: Choosing a small business entity

Is online banking safe?

How-to guide: What to do if your identity is stolen

8 tips and tricks for creating and remembering your PIN

Recognize. React. Report. Caregivers can help protect against financial exploitation

Recognize. React. Report. Don't fall victim to financial exploitation

5 tips for seniors to stay a step ahead of schemers

Webinar: U.S. Bank asks: Are you safe from fraud?

Learn to spot and protect yourself from common student scams

College budgeting: When to save and splurge

How I did it: Paid off student loans

The A to Z’s of college loan terms

How to save money in college: easy ways to spend less

The password: Enhancing security and usability

BEC: Recognize a scam

Benefits of billing foreign customers in their own currency

Top 3 ways digital payments can transform the patient experience

Hospitals face cybersecurity risks in surprising new ways

3 European market trends to watch

Celebrate a big event

Key considerations for launching an ILP

10 ways a global custodian can support your growth

Easing complex transactions: Project finance case studies

3 questions to ask your equity, quant and CTA fund administrator

Administrator accountability: 5 questions to evaluate outsourcing risks

Inherent flexibility and other benefits of collective investment trusts

Costs to consider when starting a business

How Shampoo’ed is transforming hair and inspiring entrepreneurs

Questions to ask before buying a car

Opening a second location? Cloud-based POS is key to a smooth unveiling

Should you give your child a college credit card?

Overdrafts happen: Steps to get you back on track

Webinar: Uncover the cost: Building a home

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

Adulting 101: How to make a budget plan

You can take these 18 budgeting tips straight to the bank

Your financial aid guide: What are your options?

Webinar: AP automation for commercial real estate

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

U.S. Bank Student Scholarship

Interval funds find growing popularity

The benefits of a full-service warehouse custodian

Top 3 considerations when selecting an IPA partner

A first look at the new fund of funds rule

How liquid asset secured financing helps with cash flow

Cryptocurrency custody 6 frequently asked questions

The value of engaging a professional paying and exchange agent

5 tips for a successful joint venture

An investor’s guide to marketplace lending

Know your customer: How updated rules affect M&A closings

Leveraging the ASC-842 rule changes in equipment lease accounting

Depositary services: A brief overview

IRC Section 305(c): Deemed distributions and related regulations

What is a CLO?

How you can take advantage of low mortgage rates

Depositary bank and collateral agent

Social Security benefits questions and answers

Multigenerational household financial planning strategies

Major purchases: How to pay for big ticket items

The different types of startup financing

Liquidity management: A renewed focus for European funds

3 innovative approaches to ESG investing in Europe

The AI journey in finance: How to make it part of your strategy

Banking basics: Avoiding fraud and scams

Crack the SWIFT code for sending international wires

4 ways to outsmart your smart device

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

Your 4-step guide to financial planning

Working after retirement: Factors to consider

Why year-round giving is important

Why compound interest is important

What types of agency accounts are available for investors?

What type of investor are you?

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

Consolidating debts: Pros and cons to keep in mind

Myth vs. truth: What affects your credit score?

Improving your credit score: Truth and myths revealed

How to spot a credit repair scam

Decoding credit: Understanding the 5 C’s

Understanding yield vs. return

Should rising interest rates change your financial priorities?

Saving vs. investing: What's the difference?

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

Retirement income planning: 4 steps to take

Retirement expectations quiz

LGBTQ+ financial planning tips

Understanding guardianship and power of attorney in banking

What I learned from my mom about money

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

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

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

Managing money as a military spouse during deployment

How to cut mindless spending: real tips from real people

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

What financial advice would you give your younger self?

Essential financial resources and protections for military families

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

What you need to know about renting

What’s in your emergency fund?

Certificates of deposit: How they work to grow your money

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

When to and benefits of refinancing a car loan

Car shopping: Buying versus leasing your next vehicle

How I did it: Deciding whether to buy an RV

What you should know about buying a car

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

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

Take the stress out of buying your teen a car

How to choose the best car loan for you

Give a prepaid rewards card for employee recognition

How I did it: Joined a board of directors

How AI in treasury management is transforming finance

Practical money skills and financial tips for college students

Tips for navigating a medical hardship when you’re unable to work

Making a ‘workout’ work out as a business

How and when to ask for a raise

Money management guide to financial independence

Money Moments: How to manage your finances after a divorce

Personal finance for teens can empower your child

5 unique ways to take your credit card benefits further

5 reasons why couples may have separate bank accounts

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

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

Co-signing 101: Applying for a loan with co-borrower

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

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

What’s your financial IQ? Game-night edition

How to use debt to build wealth

How to talk about money with your family

How having savings gives you peace of mind

How to build credit as a student

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

How to retire happy

How to protect your digital assets in your estate plan

5 ways to build your business through community engagement

Money Moments: Tips for selling your home

How I did it: My house remodel

Webinar: How to stay safe from cyberfraud

First-timer’s guide to savings account alternatives

How mobile point of sale (mPOS) can benefit your side gig

Everything you need to know about consolidating debts

Making the cross-border payment decision: Wire or international ACH?

Accommodating the growing complexity of private equity funds

Webinar: Robotic process automation

Does your savings plan match your lifestyle?

Student checklist: Preparing for college

Email marketing: 10 mistakes to avoid

Celebrity Cake Studio’s two decades of growth and success

Automating escheatment earns respected innovation award

How Al’s Breakfast is bringing people together

3 tips for saving money easily

What you should know about licensing agreements

Can faster payments mean better payments?

Webinar: CRE Digital Transformation – Balancing Digitization with cybersecurity risk

ABCs of BEC

Hospitals face cybersecurity risks in surprising new ways

Webinar: CRE Digital Transformation – Balancing Digitization with cybersecurity risk

Resources for managing financial matters after an unexpected death

5 steps for creating an employee recognition program

Four ways to make a strong resume for your first real job

Webinar: Uncover the cost: College diploma

Answering the ABL question

DIY home projects 101: tips from a first-timer

Crypto + Homebuying: Impacts on the real estate market

Your quick guide to loans and obtaining credit

How to hire employees: Employee referral vs. external hiring

Myths vs. facts about savings account interest rates

Military homeownership: Your guide to resources, financing and more

3 ways POS data analysis can help define your brand

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

Break free from cash flow management constraints

BEC and deepfake fraud

Webinar: Uncover the cost: Home renovation

Webinar: Bank Notes: College cost comparison

How you can prevent identity theft

Service provider due diligence and selection best practices

How tenacity brought Taste of Rondo to life

Programme debt Q&A: U.S. issuers entering the European market

Best practices for optimizing the tech lifecycle

Do I need a financial advisor?

How a bar trivia company went digital during COVID-19

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

4 questions to ask before you buy an investment property

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

4 steps that give your business an SEO boost

How to access digital assets after a loved one's death

How much money do I need to start investing?

How do interest rates affect investments?

Healthcare costs in retirement: Are you prepared?

Good debt vs. bad debt: Know the difference

Preparing for homeownership: A guide for LGBTQ+ homebuyers

Parent checklist: Preparing for college

What you need to know about identity theft

Webinar: Tips to avoid today’s cyber threats

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

Financial steps to take after the death of a spouse

Financial fitness quiz

Estate planning documents: Living trusts vs. will vs. living will

Annual insurance review checklist

7 financial questions to consider when changing jobs

6 ways to teach your kids about giving

Webinar: 5 myths about emergency funds

How to best handle unexpected expenses

Enhancing the patient experience through people-centered payments

Digital trends poised to reshape hotel payments

Transition to international ACH

Maximizing your deductions: Section 179 and Bonus Depreciation

Unexpected cost savings may be hiding in your payment strategy

Evaluating interest rate risk creating risk management strategy

Authenticating cardholder data reduce e-commerce fraud

Ask an expert Q&A: 3 US ETF trends and their impact in Europe

Colleges respond to student needs by offering digital payments

Luxury jeweler enhances the digital billing and payment customer experience

How Everyday Funding can improve cash flow

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 rates and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.