Questions

[dlgladson1]

I have a few questions.

1. If I bought a home with my husband in 2021, do I mark that on this year's taxes? If so, how do I do that?

2. I got a new job this year as teacher. Does that change anything? If so, what?

3. Do retirement accounts get included in taxes?

[bkaytaxes]

Hello @dlgladson1 !  Thanks for joining us today!

Congratulations on all the new changes this year and being proactive on your taxes!

1. The purchase of the home is not a taxable event if its used as your personal residence and does not get entered on your tax return.  The purchase is not a tax event, but it may allow you to itemized your taxes and get a bigger tax break!  If you financed the house you should get a 1098 from your mortgage company that will  list   mortgage interest, real estate taxes and points that you paid during the tax year that your can report on your taxes as a deduction.  Since you just purchased the home, some of those expenses may be on your closing statement so have both when you prepare your taxes. 

2. Changes in employments can impact your taxes in several ways.  The additional taxes will add income to the amount your report on your taxes and could increase you tax liability.  So follow the special instruction on filling out your W-4 to make sure the correct amount of taxes is taken out.  Turbo Tax has a special tool to help when you prepare your W-4:   W-4 Calculator     Remember,  as a teacher,  you may be able to take and Educators Deduction each year as a teacher (K-12). Educator Expense Deduction 

3.  Retirement Accounts are great tools for saving money for retirement but can also impact your taxes in a few ways.  When you contribute to retirement, depending on your total income,  you may be eligible for a Savers Credit Details for the Savers Credit.  The information is on your W-2 so when you input that into the software it will let you know if you are eligible.  Otherwise retirement grows tax free until you start withdrawing money.  Depending on when and how you take money out it may or may not be taxable but you will get tax forms that will explain any taxable amounts (1099-R).  Generally if you take money out that was contributed pre-tax it will be taxed when you start drawing on retirement.  If you withdraw it early there may be penalties.  If you start withdrawing money that was already tax you don't pay taxes again on the money and if you have a Roth the earning are tax free!!

Wish you two all the best!!  Let us know if you have any additional questions!

[AR_CPA2]

Hello dlgladson1,

Thanks for joining us today!

Congratulations on the purchase of your home. 

1.  You may be able to deduct your mortgage interest and property taxes each year if your Itemized Deductions are more than the standard deduction.  

2.  You should be getting a W-2 for the income earned from this job as a teacher.  Also, your employer should be withholding federal and state taxes.

3.  If you take any distributions from your retirement accounts, you should receive Form 1099-R and it may be taxable.  You can instruct them to take out withholding for the appropriate federal and state taxes.

[MB7_EA]

Hello  dlgladson1,

1. Your mortgage company will usually mail out by January 31st of every year your Mortgage Interest Statement.  You will enter that information on the "Deductions and Credits" section of your tax return.

2.  Getting a new job changes income that is reported on your tax return.  Depending on your combined income from the new job, it may bring you to a different tax bracket.

3.  When you say retirement accounts, I will assume a few things:

      - If you are receiving retirement income, wage income (W2) along with social security, then your social security can be taxed up to 85%.

      - If an early withdrawal was made from a retirement account, it may count towards taxable income and the IRS imposes a 10% penalty for early withdrawal if there are no exceptions.

      -  If you are making contributions to a Traditional IRA, you may be eligible for a tax deduction.  Contribution limits for 2023 are $6,500 or $7500 if you are 50 or older.  Limits for 2022 are $6,000 or $7,000 if 50 or older.