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How Life Events Can Save You Money from Tax Savings

Experiencing significant life milestones like getting married recently or buying your first home can lead to a myriad of uncertainties and inquiries. While you may be pondering how these pivotal moments impact your financial situation, rest assured that they can also yield tax savings opportunities.

Embarking on the journey of marriage, becoming a homeowner, welcoming a new addition to the family – these pivotal milestones have the potential to bring about tax savings when the time comes for tax filing.

Getting Married

If you have recently tied the knot or are contemplating marriage this year, chances are you are aware of the significant financial commitment involved. Despite the hefty price tag associated with weddings, one silver lining of getting married is the potential for increased tax benefits compared to when you were unmarried.

With marriage joining your lives, you and your partner can now combine your tax returns under the status of married filing jointly. This status may result in decreased tax obligations compared to when you were filing individually, thanks to the more favorable federal tax rates provided to married couples filing jointly.

In many cases, married individuals can enjoy tax benefits. If a couple ties the knot on the last day of the year, they are deemed married for the entire year and can take advantage of the various perks that come with marriage.

Choosing to file jointly as a married couple opens the door to potentially increased tax deductions and tax credits. One notable enhancement is the larger standard deduction available for the 2024 tax year.

In the upcoming tax year, individuals filing as single will see a boost in the standard deduction to $14,600, while those filing jointly as married will enjoy an increased deduction of $29,200. Moreover, married couples filing jointly in 2024 can benefit from an EITC (Earned Income Tax Credit) of up to $7,830 with three children.

tax savings

Buying a New Home

Making the decision to become a homeowner brings about significant life changes and presents an opportunity for substantial tax savings. The costs associated with a mortgage and property taxes can be quite substantial. Still, for those who have recently bought a home or are contemplating the idea, there is potential to lower tax liabilities by deducting mortgage interest and property taxes when itemizing deductions on Schedule A.

Having a Child or Children

If you welcomed a new member to your family this past year, I extend my warm congratulations! Amidst the happiness and thrill that comes with having a child, you might now be contemplating the financial aspects of caring for your little one.

Great news! Your family can now take advantage of additional tax deductions and tax credits. When you welcome a new baby, you become eligible for various tax benefits, such as the Child Tax Credit and the Child and Dependent Care Credit if you incur child care expenses.

Child Tax Credit:

  • Each dependent or a child must be under 17
  • Up to $2,000 for the tax years from 2022 to 2025 
  • If you are a single filer with an income of $200,000 or less or a married couple filing jointly with a combined income of $400,000 or less, you may be eligible for the Child Tax Credit.

Child and Dependent Care Tax Credit:

When considering tax credits for childcare expenses, you may qualify for a tax credit of up to 35% of eligible expenses. This Child Care Tax Credit applies to up to $3,000 of expenses for one child or $6,000 for two or more children.

Once your adjusted gross income surpasses $15,000, the tax credit begins to decrease, dropping to a minimum of 20% instead of the usual 35%. This adjustment highlights how welcoming a new addition to the family can lead to a significant tax benefit.

Experiencing life transitions can evoke a mix of emotions, from excitement and hope to confusion and costliness. However, amidst the whirlwind, it’s worth noting that these transitions often come with significant tax advantages.

Rest assured that you don’t need to stress about understanding the intricate tax regulations. Regardless of the financial decisions you made in the past year, the experts at Rapid Tax dedicated Tax Professional will ensure that they are accurately reflected in your tax filing. Whether you prefer to handle your taxes independently or have one of our seasoned professionals assist you, we are committed to maximizing your refund and ensuring you receive every entitlement you are due, which is guaranteed.

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Important Tax Updates That Will Change After 2025

In the absence of Congressional action, 2026 will usher in significant tax adjustments, such as increased tax rates and reduced standard deductions. Anticipate substantial 2025 tax updates on the horizon, all attributed to the repercussions of the 2017 tax reform legislation.

Beginning in 2026, a significant number of individual tax provisions are set to revert back to the regulations implemented in 2017. These provisions, which are currently scheduled to expire after 2025, will require action by Congress to be extended beyond that point. Let’s delve into the essential provisions that are due to expire.

  • 2025 Tax Update 1. In the upcoming year of 2025, alterations are set to take place within the individual income tax brackets. tax rates will return to 10% ~ 15% ~ 25% ~ 28% ~ 33% ~ 35% ~ 39.6%.
  • 2025 Tax Update 2. We can expect to see significant increases in standard deductions in 2025. The legislation passed in 2017 led to a substantial doubling of these deductions, marking a significant shift in tax policy.
  • 2025 Tax Update 3. In the year 2025, the child tax credits have seen a significant increase compared to the amount set before 2018. The credit has now been raised to $2,000, up from $1,000.
  • 2025 Tax Update 4. In the tax reform bill of 2017, a change was made to the AGI (Adjusted Gross Income) cap for cash donations to qualified charities, boosting the limit from 50% to 60%.
  • 2025 Tax Update 5. In the current year of 2025, individuals benefit from a significantly increased estate and gift tax exemption.
2025 tax update

Some Restrictions on Well-Known Tax Deductions End After 2025.

  1. In compliance with current regulations, there are limitations on the tax deductibility of home mortgage interest can be tax deducted on up to $750,000, which is less than what was previously.
  2. Incorporated within Schedule A are various tax deductions that fall under the 2%-of-AGI threshold. The recent legislation of 2017 has removed this particular group of itemized deductions up to the year 2025. Among these are costs such as unreimbursed employee expenditures (covering travel, meals, education, etc.), fees associated with brokerages and IRAs, hobby-related expenses, and fees linked to tax return preparation.
  3. In the tax year 2025, individuals may claim tax deductions for theft and casualty losses from only the federally declared disaster area eligible for the tax deduction.
  4. In the upcoming year of 2025, two significant tax provisions set to expire were not present in the laws of 2017. One of these changes is the widening of eligibility for the Obamacare health premium credit, benefiting more individuals purchasing insurance through a marketplace. 

Additionally, the exemption from federal income tax on most student loan debt forgiven between 2021 and 2025 stands out as a departure from the usual tax treatment of canceled debts. Find your dedicated RapidTax Tax Professional to walk you through these new 2025 tax updated and provisions from start to finish.

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Should I Get a Tax Refund Advance Loan?

Exploring the option of a tax refund advance loan? Weigh the advantages and disadvantages of obtaining a tax refund advance loan. Rapid Tax provides the opportunity to secure a quick tax refund advance by utilizing certain tax preparation services. While many tax preparation firms may not offer the full expected refund amount to prevent issues during IRS review, Rapid Tax fast refund advance loans facilitate accessing your tax refund funds quicker with minimal or zero charges.

Pros

Access some of your federal tax refund money quickly and affordably.

When opting for certain options, there is a possibility of enjoying a 0% interest rate along with low fees to pay.

Easily manage your finances without any hassle by effortlessly handling your funds. Simply submit your tax return to initiate automatic repayment of your loan when your tax refund is processed.

Prevent potential delays from the IRS. It’s important to take certain precautions. While the majority of tax refunds are typically processed within three weeks of submission, there is always a chance for hold-ups, particularly if you have applied for the earned income tax credit or the additional child tax credit.

refund advance loan

Cons

It’s important to note that obtaining a tax refund advance loan may not be possible for everyone. While tax refund advances typically have a good approval rate, there is no absolute guarantee of approval. If you decide to hire a tax professional specifically for a tax refund advance loan, you could end up feeling let down and out of pocket due to the costs associated with tax preparation.

Should you find yourself with an unwanted account, it might not disappear on its own. After receiving tax advance loan funds into a checking account, remember that the account may linger even after your tax refund is depleted. To close the account after your loan is settled, take proactive steps to close it once your refund is issued.

There is a possibility of facing the consequence of overspending when it comes to tax refunds. It’s important to be prepared for the situation where your actual refund amount ends up being lower than initially anticipated. Should this occur, there may be a need to return the discrepancy between the amount you received and the sum the IRS disbursed.

Can I Still Get a Loan on My Tax Refund Even After I Have Already Filed My Taxes?

When looking to participate in tax refund advance programs, the first step usually involves submitting an application for the loan at the time of electronically filing your taxes with Rapid Tax. 

Individuals who have already submitted their tax return directly to the IRS may find themselves ineligible for these programs due to not meeting the necessary criteria.

To maximize your chances of receiving a tax refund advance loan, it is advisable to select a file with Rapid Tax dedicated Tax Professional at the beginning of the season. These advance options are typically offered during the months of January or February, emphasizing the importance of early action.

To Summarize

Receiving a tax refund advance loan is a convenient and cost-effective way to early access your refund sooner than expected. If you had already budgeted for preparation expenses, opting for a refund advance poses minimal risks and allows for quicker access to your tax refund.

Timing is crucial when it comes to filing your taxes. Failure to act promptly or neglecting to request an advance could mean waiting until the following year to seize the opportunity.

Consider utilizing your tax refund to reduce your debt and optimize your finances. Consult with your assigned Rapid Tax dedicated tax Professional to determine the best approach for allocating extra funds towards paying down debts.