Good morning and welcome to my first post in the Daily Tax Tip series!
Those of you who read my posts regularly may or may not know that I subscribe to the School of Multiple Income Streams and in addition to my “day job” (and blogging), I am also a Certified Tax Preparer. Since 2010, I have been completing returns and making sure that I stay up-to-date on our nation’s tax code. Most days, it’s super fun. Other days, it’s just fun. Let me get right into today’s #DailyTaxTip so that I don’t bore you with more of an intro (this won’t even be included in future posts).
“Daily Tax Tip” for January 20, 2014:
What is the most important thing to get right on your annual tax return? If you said, everything, you are correct (that was a little tax humor). However, the one thing that sets the tone for your entire return is your FILING STATUS, so it is imperative that you use the one that works best for you. The United States Tax Code recognizes five categories for individuals to pay their income tax. They are below, with a brief explanation for each.
Unmarried Taxpayers (fall under three categories):
- Single: Unmarried, divorced, a registered domestic partner, or legally separated according to state law on December 31.
- Head of Household: Unmarried taxpayer who maintains more than half of the cost of a household for more than half of the year for oneself and a dependent.
- Qualifying Widower with Dependent Child(ren): Taxpayers who maintain the principle residences of qualifying dependents AND whose spouses have died in either of the last two years (2012 & 2013) can be considered surviving spouses if they have not remarried.
Married Taxpayers (fall under the last two categories):
- Married Filing Separately: Given some tax situations, a married couple may feel it is best to file separate returns and this status allows them to do so.
- Married Filing Jointly: A couple that is married on December 31 may file a joint return BUT should the couple have a legal separation or divorce by December 31, they can not file a joint return for any part of the year.
Some other quick things about your FILING STATUS:
- It is determined by your marital status on December 31st.
- It determines your tax liability.
- It determines your standard deduction AND exemptions amount.
I hope that this Daily Tax Tip proves useful for many of you. Make sure you follow the hashtag #DailyTaxTip on Twitter and if you have any questions at all, do not hesitate to ask.
Since 2010, Courtney has been using her training and expertise to provide affordable, accurate and ethical tax preparation services to those in her community. She firmly believes in the saying, “When you know better, you do better,” and it is always her intent to educate others on things that significantly impact their lives.