Multiple life events

[rmaruza]

Hi, we would like to know the implications of the following changes on our tax:

1. Newborn in June
2. Purchased a home via mortgage in April
3. Started a new business in May
4. Received raise for both our incomes (~10%)

Context:

• We file jointly
• We now have 2 dependent children

We would appreciate any insight you can share on what to expect for this next tax season.

Thank you

[AmitaR]

Hello rmaruza,

Congratulations for all the good things happening to you in 2023!!

Make sure you get a SSN for your newborn.  If you pay for Child Care expenses, you may qualify for Child Care Credit in addition to Child Tax Credit. 

You Mortgage Interest may be deductible along with any points you may have paid and real estate taxes.

For new business, depends what type of entity it is.  If it is Sole Proprietorship or Single Member LLC, you may file it with your Individual Income Tax Return, but if it is a Partnership or S Corp, you will need to file a separate business tax return and then get a Schedule K-1 to include in your personal tax.

Your raise may put you in a higher tax bracket depending on your taxable income. 

Make sure you have good records and start working on your taxes early and don't wait until the last minute.

All the best!!