Here's a look at the laws that could wage a multipronged attack on your wallet and what you can do to prepare.
Your returns may be relatively uncomplicated -- but sometimes new circumstances can make tax preparation a bit trickier. Follow these tips to avoid making mistakes.
1. You Got Divorced.
Even if the final date on your divorce is Dec. 31, the IRS views you as divorced for the entire year -- so don't choose married filing jointly status on your return.
If you have children, your divorce decree should state who can claim them as dependents. If that wasn't decided, you and your former spouse can arrange to alternate years using IRS Form 8332.
2. Your Spouse Dies.
You can file as married filing jointly for the tax year your spouse died (unless you remarried by the end of the year).
Keep in mind that life insurance payouts are generally free from federal income tax. But if you invested the money and earned interest, the interest still needs to be reported.
3. Your Dependents Go Solo.
You can still claim an exemption for your children if you pay at least half their expenses; they are full-time students in a qualified institution; they are younger than 24 at the end of the year; and meet other IRS requirements. Make sure they don't file returns claiming themselves as dependents, which is viewed as "double dipping" by the IRS.
4. You Have W-2s from Employers in Multiple States.
This can be a problem if you must file a state return for one or more states. Keep in mind that relocating for employment reasons can sometimes make moving expenses deductible.
5. Your W-2 Is Wrong.
Contact your employer immediately if your name, Social Security number, street address or pay amount contains errors. The employer should then file a Form W-2c with the proper details.
|Military Taxes Personal Finances|
Once the VA has granted your disability, an entitlement letter will be provided that outlines the percentage of disability and monthly compensation amount granted.
With tax season in full swing, you should take note of the many deductions and credits available to you because of your military service; whether on active duty or on reserve.
Although going back to school can be a pricey venture, military servicemen and women should keep in mind that their military status makes them eligible for certain education benefits.