You're working, and you've got a family that depends on you - both now and down the road. Where do you invest your money? Do you borrow against the equity in your house? Through a preferred provider relationship with USAA, The American Legion can provide expert financial advice to just about any question.
Your returns may be relatively uncomplicated, but sometimes new circumstances can make tax preparation a bit trickier. Follow these tips to avoid making mistakes.
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.
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.
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 at a qualified institution and 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.
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.
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 Form W-2C with the proper details.