5 Life Events That Taxes Can Help or Hurt
"We just had the Tax Relief Act of 2010 that did extend many favorable tax provisions through 2012," Perlman says. "But what happens after 2012 is a big question mark. Right now, we have marriage penalty relief, and things like that are all important to think about. If you get married and have your child in 2013, you may not have so much. Of course it is not an either/or choice, because if you get married and have a child this year, hopefully you will still be married and have the child in 2013. You are going to be faced with those unknowns regardless of what you do. But these are things to consider. We have some historically great tax relief right now, and we don't know if we'll have it in the future."
For couples looking to expand their family through adoption, the new tax laws improve the existing incentives. The amount of the adoption credit increased by $1,000 and in 2011 is slightly more than $13,000. The credit is also fully refundable.
"A nonrefundable credit means that the credit can't be more than your tax liability for the year. You can carry it forward, but if you are a lower-income or middle-income person with many children and expenses, a nonrefundable credit may not be a great benefit to you," Perlman says. "With 'refundable,' you get that check in the mail."
There is also a new provision for those adopting special-needs children. It allows parents to get the credit regardless of their expenses; for other parents, it is weighted against the costs of raising the child.The classification of "special needs" does not necessarily mean the child has any kind of disability. Each state has its own laws -- in some, for example, it can apply to adopting a sibling group, while adoption expenses in and of themselves are not deductible. 2. Going back to school
There are a variety of tax credits, deductions and savings plans available to taxpayers to help with the expense of higher education. In many cases, adults returning to academia can benefit just as their children's college education does.
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