Now that you’re filing joint taxes, it’s more important then ever to keep Uncle Sam’s paws off your money.
Verify Your Filing Status
Not even married a month? Well, as far as the government is concerned, you’ve been married for the entire year. As long as you tie the knot by midnight on December 31, you’re official.
Choose Your Filing Status
You do everything together -- jog, cook, sleep, have sex (one hopes) -- but should you file your tax returns jointly or separately? Typically, a joint claim will definitely work to your advantage in the way of lowering tax rates and the ability to claim more deductions. It’s better to file separately if one of you has substantial uninsured medical or miscellaneous expenses that would allow a larger deduction, thus lowering the overall tax. Filing separately also means one spouse is not accountable for the other’s outstanding financial liabilities.
Select a Filing Method
Will it be paper or computer? According to the IRS, 70 million returns were e-filed last year. Why? It's more accurate. When you file a paper return, a donut jockey has to key in all of your critical info. E-filing gets better: If you’re one of the fortunate people getting a refund, the money can be deposited directly into your checking or savings account in less than three weeks -- compared with six to eight weeks if you file the Fred Flintstone way.
Pick a Deduction Method
You can claim tax deductions in one of two ways: standard or itemized. With standard, you subtract the set dollar amount determined by the government from your adjusted gross income to calculate your taxable income. For 2007, it’s $5,000 if you’re single or married filing separately; and it’s $10,000 if you’re married filing jointly. Itemized deductions are personal expenses like medical bills, real estate taxes, nonreimbursed business dinners, and travel. To decide which is better for you, just do the math. If the total itemized deduction is greater than the standard deduction, then itemize. If not, take the standard one and make life easier. Just know that if you’re filing separately and one of you itemizes, the other has to as well.
Don’t Slack If One of You Is Self-Employed
We hope this is not brand-new information. You should have been paying estimated self-employment tax (money that goes toward social security and Medicare) if your self-employed income is more than $40K.
Save Your Records
Keep your tax returns forever. Save supporting tax documents for three years (the statute for being audited). If you want to be supersafe, then save these papers for seven years. The government is allowed to extend the statute if it can prove you’ve been fraudulent -- and the state can tack on an extra year to that!
Prep Now for Next Year
Putting your statements and receipts in one safe place right now will save you from a big headache next year when you can’t seem to find anything. Put one person in charge. Buy an accordion folder to store paid bills and financial records. Feeling really ambitious? Create a spreadsheet of money earned and spent; you can also use it to keep track of all the paperwork as it arrives. No volunteers? Draw straws, sucker.
-- Alonna Friedman
Mar 12, 2010
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