It’s that time of year again! Tax season. You may be ready for the normal deductions and expenses, but if you have had a major life change last year, are you ready for the potential impact it could have on your tax obligation?
Here are just a few examples to think about:
Foreclosure. Unfortunately, many people have experienced the loss of their home. While it is a devastating event, foreclosures are treated like sales for tax purposes. You could end up with a reportable event. Depending on the amount of the arrears forgiven or the fair market value of the home, you may have income or a gain that must be reported.
Death of a spouse. If your spouse died last year and you did not remarry by December 31st, you are still allowed to file a final joint form 1040 with your deceased spouse for this year and still benefit from the more taxpayer friendly rules for joint filers. That final return will include your deceased spouses income and deductions up to the time of death, plus income and deductions of the surviving spouse (you) for the entire year.
Unemployment. Being unemployed, even if you were out of work for the entire year, does not exempt you from tax obligations. You must pay taxes on any income you make, even if that income did not come from a traditional job. Some of the things that count as income, according to the IRS, include income from freelance work or odd jobs, unemployment benefits or severance pay.
If you find yourself in any of these situations, be sure you are consulting a tax professional and please do not attempt to do your taxes yourself.
Black Enterprise Columnist Jennifer Streaks is a Financial Expert, Author & Pundit. Continue the conversation by visiting her website www.JenniferStreaks.com or following her on twitter @JStreaks.