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.
As the April 15 deadline approaches, tax time becomes crazier and crazier. And that’s in the best of circumstances. If you add in a few of life’s curveballs, you could have a downright disaster. So, your returns may be relatively uncomplicated, but new circumstances can make tax preparation a bit trickier.
USAA’s J.J. Montanaro, a Certified Financial Planner practitioner, says you may want to consider engaging the help of a tax professional to make sure you are taking advantage of the tax incentives. However, whether you tackle your taxes yourself or turn to a tax pro, follow these tips to avoid mistakes.
1. You Got Divorced. Notwithstanding reality, when it comes to your filing status it’s black and white. 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. Visit IRS.gov for more information.
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). Additionally, you may also be eligible to file as a qualifying widow(er) with dependent child for two years following the year your spouse died. 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, 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. State laws and filing requirements vary, so check with the state in which you had earned income for specific requirements. Remember, bad news doesn’t get better with time. Keep in mind that relocating for employment reasons can 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.
This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.
USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers.
USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner TM in the United States, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements