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Life events that change your taxes

Big moments in life almost always show up on your tax return. Here's what changes when you get married, divorce, buy a home, retire or lose a loved one, and what to update along the way.

Federal rules for the 2025 tax year. Many of these situations are worth a conversation with a tax professional.
Marriage Divorce Buying a home Retiring A death in the family

Getting married

What changes

  • Your filing status is based on whether you're married on December 31. Marry on New Year's Eve and you're married for the whole year.
  • Most couples file jointly, which usually gives the lowest combined tax and access to more credits. Filing separately is allowed but loses several credits.
  • Two incomes can push you into a higher bracket than either of you alone.

What to update

  • Report a name change to the Social Security Administration before you file, so the name on your return matches their records.
  • Both of you should submit new W-4s at work, especially if you both earn income.
  • Update your address with the IRS (Form 8822) and tell the Marketplace if you buy health insurance there.
Ask yourself: Have we compared our withholding to what we'll owe as a couple?

Divorce or separation

Filing status and children

  • Your status depends on whether you're divorced or legally separated by December 31. If you're unmarried and pay most of the costs of a home for your child, you may qualify as head of household.
  • Generally the parent the child lives with most of the year (the custodial parent) claims the child. The custodial parent can release the child tax credit to the other parent with Form 8332.
  • Child support is never deductible for the payer or taxable for the recipient.

Money and property

  • Alimony under divorces finalized after 2018 isn't deductible and isn't taxable income.
  • Transfers of property between spouses as part of a divorce generally aren't taxed at the time of the transfer.
  • Splitting a 401(k) or pension usually needs a qualified domestic relations order (QDRO) to avoid tax and penalties.
  • If your former spouse caused a problem on a joint return, you may qualify for innocent spouse relief (Form 8857).
Ask yourself: Who will claim the children, and is it in writing?

Buying (or selling) a home

Owning a home

  • Mortgage interest and property taxes only help if you itemize, and itemizing only helps if your total beats the standard deduction.
  • Mortgage interest is deductible on up to $750,000 of debt to buy, build or improve your home. Your lender sends Form 1098.
  • Points paid to get your mortgage may be deductible.
  • Starting in 2026, mortgage insurance premiums count as mortgage interest again, with income limits.
  • The home energy credits ended for work done after December 31, 2025.

Selling a home

  • If you owned and lived in the home for at least 2 of the last 5 years, you can generally exclude up to $250,000 of gain ($500,000 if married filing jointly).
  • Keep records of what you paid and what you spent on improvements. They lower your gain.
  • First-time buyers can generally take up to $10,000 out of an IRA without the 10% early withdrawal penalty, though income tax may still apply.
Ask yourself: Will I actually itemize, or will the standard deduction still be bigger?

Retiring

Retirement income

  • Withdrawals from traditional 401(k)s, IRAs and pensions are generally taxable. You'll get Form 1099-R.
  • Withdrawals before age 59½ usually add a 10% penalty, with some exceptions.
  • Required minimum distributions (RMDs) start at age 73 for most people today (75 for those born in 1960 or later). Missing one can bring a 25% excise tax, reduced if you fix it quickly.
  • Up to 85% of Social Security benefits can be taxable, depending on your other income.

Breaks for people 65 and older

  • A larger standard deduction for people 65 or older.
  • The new senior deduction of up to $6,000 per person for 2025 through 2028, with income limits.
  • The option to file Form 1040-SR, the large-print version of the 1040.
  • Since no employer withholds for you, set up withholding on pensions and Social Security, or make estimated payments.
Ask yourself: Is enough tax being withheld from my retirement income?

A death in the family

Final returns

  • A final Form 1040 is usually due for the person who died, covering January 1 to the date of death. It's due on the normal deadline.
  • A surviving spouse can generally file a joint return for the year of death.
  • A surviving spouse with a dependent child may be able to file as a qualifying surviving spouse for the next two years.
  • Use Form 1310 to claim a refund owed to the person who died, if required.

Estates and inheritances

  • An estate that earns income, like interest or rent, may need its own return (Form 1041).
  • Most people receive inheritances without owing federal income tax. The federal estate tax applies only to very large estates: $13.99 million for deaths in 2025 and $15 million in 2026.
  • Inherited property generally gets a new tax basis equal to its value at the date of death, which can reduce tax when it's sold.
  • Most non-spouse beneficiaries must empty an inherited IRA within 10 years.
  • Some states have their own estate or inheritance taxes.
Ask yourself: Who is handling the estate, and have we talked to an attorney and a tax professional?

Sources

Last updated: November 14, 2026

This page was written from the sources below. Official sources are from the IRS or another government body; secondary sources are tax publications used to cross-check new rules. Tax law changes, so always confirm with the official source for the year you're filing.