What’s the Best Valentine’s Day Plan? When most people plan for Valentine’s Day, they think of romance, love, roses, and Champagne. Very few would consider Valentine’s Day the perfect time to think about their taxes. But in reality, just as your relationship status affects how you spend your day on Feb. 14, it also affects your tax situation. Under U.S. tax law, for all individual returns, there are five filing statuses, all of which depend on the legal nature of your relationship or lack thereof. Choosing the right filing status is crucial to lowering your tax rate and providing higher tax credits. Here are three questions you can ask yourself this Valentine’s Day to determine which filing status will be most beneficial for you and your sweetheart. Are You Recently Divorced? If you are single and you provide more than half of the household support for yourself and a dependent, you may be able to claim the Head of Household status. This filing status allows the second-lowest overall taxes and standard deduction amount. Are You Separated?
If you’ve been separated from your spouse since June 30, you may be considered “unmarried” for tax purposes and be eligible for the Head of Household filing status. If you aren’t able to claim this status and you aren’t married, your filing status is Single. Filing taxes can be a complicated process, especially if you’ve undergone a relationship change during the past year. For this reason, we suggest that you take some time this month to consider your filing status. If you run into any issues or have questions, feel free to give our office a call.
Did You Just Get Married?
Marital status for taxes is determined on Dec. 31. Even if you got married on New Year’s Eve, as long as it is a legal marriage under state law, you are considered married for the whole year. Conversely, if you got divorced on that last day of the year, you are considered single for the full year. Generally speaking, Married Filing Jointly is the best filing option because it has the lowest overall taxes, allows two personal exemptions (even if only one spouse worked), and has the highest standard deduction amount.
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