NEW YORK — An accounting and financial planning firm has put together a list of 10 life-changing events and situations that could affect 2007 tax bills.
Gilman + Ciocia Inc. of Poughkeepsie, N.Y., put “change in marital status” at the top of the list, warning that a marriage or divorce can have a significant effect on tax exemptions, refunds and balances due.
The birth of a child, paying for a child’s college tuition, the death of a family member and the sale or purchase of a home followed on the list.
Options for how to deal with each event should be considered carefully to find the most tax-favorable solution, according to the firm.
For example, current tax law allows for a generous exclusion for the gains made on the sale of a primary home. On sales of second homes, most owners can cash in up to $500,000 of profit, tax free.
“Income taxes are the largest expense the average American incurs in his/her lifetime,” Michael Ryan, president and chief executive of Gilman + Ciocia, said in a statement.