I’d like to say a quick word about evaluating the tax consequences of key life events. This message is intended for those who are making decisions in the following areas:
1. Should I get married? If I get married, how will that effect my taxes?
2. Should I buy a home?
3. Should we have a child?
4. Should I start my own business?
5. Should I buy a rental property?
6. Should I retire?
You may ask any or all of these questions at some point in your life. I urge you to ask a tax professional before making these decisions. It could be yes but when? Timing is everything in taxation. For some people the answer is the sooner the better. For others I advise, let’s work on your situation a little longer before you make this life changing decision.
When we evaluate the tax consequences, we start with the taxpayer’s details such as age, income, dependents, and filing status. We evaluate the income mix for passive and active sources. We close the gap between sources and uses. We address the long term consequences of the decision, not just a one year window.
Any fork in the road deserves an informed decision. What direction will this choice take you? Are you willing to look before you leap? A second set of eyes looking at your situation objectively can shed new light on the key issues.
