Tax questions

[CSBW]

Hello, 

Thank you for hosting this event. I have a few questions for you. 

1) How does getting married impact taxes? Is it better to file separately or jointly? 

2) How do monetary gifts impact taxes? If a family member directly pays a bill for us, is this considered a gift? 

3) How will buying a house and having a baby impact our taxes? 

Thank you!

[Katie-P]

Hi CSBW,

Thanks for participating in today's event!

• How does getting married impact taxes? Is it better to file separately or jointly? --> It is generally better for married people to file jointly. Here is an excellent resource that discusses this very question: Should You and Your Spouse File Taxes Jointly or Separately? 
• How do monetary gifts impact taxes? If a family member directly pays a bill for us, is this considered a gift?  --> It is the giver of the gift who may have a tax impact, not the recipient. Whether or not it is considered a taxable gift to the giver depends on several factors. This article discusses this in more detail: The Gift Tax Made Simple.
• How will buying a house impact our taxes?  --> Buying a house does not necessarily impact your taxes in the year you purchase the home. One way it could is if you have a mortgage; mortgage interest is one of the allowable itemized deductions. But most people take the standard deduction anyway, because it is so high (reference this article: Standard Deduction vs. Itemized Deductions: Which Is Better?) . It is usually when you sell the house that there may be a tax impact, but many people don't even have to pay taxes when that happens, if they qualify for the Home Sale Gain Exclusion. The main tax advice I'll give you is to keep very good records of your home improvements. The costs of these will add up over the years, and you'll want to include those in your adjusted cost basis of the home. A higher adjusted cost basis increases the likelihood of you avoiding capital gains taxes when you sell.
• How will having a baby impact our taxes? --> Having a baby may qualify you for tax credits such as the Child Tax Credit, the Child Care Credit, and maybe even the Earned Income Credit.

I hope this answer and my resources are helpful to you! 

Best wishes,

Katie