Are you welcoming the birth of a new child? Getting married or divorced? Just purchased your dream home? These are all events that can bring about unique changes to both your family dynamic and federal income tax obligations. Changes and additions to the makeup of your family can have a big impact on how much in taxes should be withheld from your payroll. In fact it may be a great idea to submit a new federal W-4 income tax withholding form when certain life changes occur.
The W-4 Federal Withholding Form
Form W-4 allows your employer to withhold the correct amount of federal income taxes from your pay. When you first start a new job, you must submit a form W-4. Complete and submit a new W-4 form every year, especially when changes have occurred to your financial or familial situation. These changes may allow you to take certain exemptions that could lower the amount of taxes that you owe each year.
Welcoming a New Child?
Welcoming a new child to your family is an exciting time in life. However, a new child can have considerable implications regarding your tax obligations. Essentially, when you have dependents, such as a a new baby or a newly adopted child, you can claim one withholding allowance each. There are also additional credits that you are allowed to take including the Child Tax Credit and the Credit for Child and Dependent Care Expenses. A new dependent may also entitle you to utilize the Head of Household tax filing status.
Getting Married or Divorced?
Both divorce and marriage can completely change your tax filing status. When you are married you can choose to file a joint or single tax return. However, upon divorce you will have to file a single tax return. The single and joint filing statuses utilize different tax rates, thus after getting married or divorced it is a good idea to file a new W-4 tax form. Furthermore, it is important to realize that a divorce may prevent you from claiming your kids as dependents on your tax return.
Purchasing a New Home?
Moving into a new home can be an exhilarating experience for any family. In an attempt to stimulate home ownership, the U.S. provides the mortgage interest deduction, and also a deduction for the property taxes that you will pay for your new home. If you want to take advantage of these deductions you will need to file a new W-4 tax form.
Welcoming a new family member, buying a home, getting married or going through a divorce are all life changing events. These events can also greatly affect the amount of taxes you are required to pay each year. That’s why the family law attorneys here at Greenberg & Krieger LLP in Fairfield County, Connecticut suggest that you file a new W-4 tax form whenever you and your family experience significant changes.