Seasons here in Los Angeles are an undependable and drastically different monster than anywhere else, Summer can last half the year, while Winter might only last a few days; but the good news is that Tax Season typically comes pretty standard. Now that we’re almost a month through the new year and you’re working on removing the last one from your lexicon, your finances can finally do the same now as the IRS has begun to accept tax returns for 2017. Last year, I dolled out the 411 on all things tax season – but this year there are some updates, some new tips and tricks as well as the latest changes to the new tax codes that have rolled out for the year. As the world turns and as your personal world turns, so does your financial world – children, new employment, marriage, and legislation can put a world of change onto your tax returns. With a few life adjustments under my sleeves and a whole lot of personal growth, I have ample new information to share.
Before we dive down the rabbit hole, let’s back up for a second. Every time we get near April I tend to ask myself why the hell we even pay taxes anyways – but there are ample reasons that it’s a necessity. At the most basic level, a government and a governed society can only work properly if everyone is participating – money is one of those forms of participation, as are things like voting, working with your local city council and so on. Social and community functions like hospitals, national parks, schools, roads and the salaries of certain city employees and officials are derived directly from the taxes we pay – whether the money comes directly out of your paycheck, as with a W-2, or as an annual residual if you’re an independent contractor and go by 1099.
Documents on Documents.
Last week, many business and companies began to roll out both their electronic and paper versions of your W2 or 1099, depending on your type of employment. In addition, fiscal firms have also sent out a 1099-DIV form with instructions on investments. The easiest way to keep yourself organized is either an analog filing cabinet, or a secure digital folder. As soon as you have the basics, you can begin the filing process – and if you acquire more documents after you’ve filed, never fear: there’s a very simple process to amend your Tax Return, however that must be mailed in.
When I was a kid, my parents would assist with my taxes – and by kid, I mean 20 year old. Now that I’m old enough to figure out my own way, I defer to e-filing Intuit’s Turbo Tax, but H&R Block also offers a comparable service if you’re looking into other options. For those of you that need a lot of itemizations, deductions and or exemptions – your best bet is turning to a tax professional. With the advent of the internet they don’t necessarily need to be local, however you will want someone that understands the state laws for where you lived in 2017.
A few tax basics for your lexicon: a dependent is a person that you’re not married to that fiscally depends on you, and only you. Most adults, whether single or married, only claim 1 – but more on that later. Depending on your gross income for the past year and the federal assistance received for health insurance or social security, you might not need to file taxes at all.
Married with Taxes
Now, this to me was – and still slightly is – the tricky part. Just hitched last August, this is the first time I’ll be able to file my taxes as a married lady and I had a lot of questions, but rightfully so. When you’re married, there are two ways of filing – you can file ‘Married and Jointly’ or ‘Married and Separately’.
So let’s break this down. Filing ‘Married and Separately’ is exactly how it sounds, you submit your spouses name and social security number along with yours but the only taxes you will file are your own. On the other hand, filing ‘Married and Jointly’ combines your gross income as a couple into one umbrella group, if you notice in the chart above – the income intervals for ‘M & J’ are double the intervals of ‘M & S’, and coming with that is also a fairly nice tax break. When does each one make sense? Now, that’s the trick – and each year, it could be different depending on types of employment and each partner’s salary. For us cats over here, I computed both – the Married and Separately as well as Married and Jointly, and compared the results to myself before I believed what I read – but now I can indeed verify: filing Married and Separately makes the most sense for partners that make nearly the same amount within the same tax bracket, while Married and Jointly seems to be the most beneficial when there is an exponential disparity in income.
Officially kicking off Tax Season yesterday, you can file your taxes any time you’d like between now and the April 17th (yes, 17th) deadline. I’ve discovered a little trick, where the sooner you submit your tax return the sooner you can reap the sweet rewards. Last year, it only took a week and a half for both my state and federal return to be processed, so I like sending mine out as soon as possible. But in case I made a mistake I can file amended 1040-X anytime over the next three years. And yes, Tax Day is technically on April 15th, but that’s also a Sunday – with the observed ‘Emancipation Day’ holiday falling in Washington DC on the Monday, making it a federal holiday, thus the deadline is now Tuesday, April 17th.