Tax season might seem far away, but it has a certain way of creeping up on us and it will be here before we know it. Here are some tips for female tax filers to eliminate some of the angst out of preparing taxes:
- Get organized. Create a file for the current tax year. During the year slam in paperwork for transactions that impact your taxes, e.g. copies of letters from nonprofits thanking you for charitable contributions, receipts for IRA contributions, closing statements from a refinancing, receipts for vehicle registration and property tax payments, beginning and ending odometer readings if you use your vehicle for business. Then in January when all those important tax documents arrive – W2s, K-1s, 1099s, etc – put those in the tax file and voila, you have a compilation of your tax data without a lot of extra work. Begin a new file at the start of every year.
- If you suspect your ex-spouse will attempt to take your kid(s) as dependent(s) on his tax return and he is not entitled to the deduction, beat him to the punch by filing your taxes first. The IRS will not get in the middle of a domestic dispute. Whoever files first gets the deduction. If the later-filing party is entitled to the deduction, he or she will have to make a case for it.
- Keep important information relating to the validity of deducting your dependent in your tax file. This includes paperwork such as school records, which show the child lived at your address, and records to prove that you provided more than 50% of the child’s support.
- At year end, ask your child care provider for a statement showing how much you paid. Make sure you have the provider’s federal ID number or Social Security number and address in order to take the credit.
- Track alimony payments–this is taxable income to you and must be reported on your income tax return. Compare your total with your ex’s total; one way to avoid an audit is to be sure alimony numbers on both party’s tax returns match. Child support is not taxable nor is it a deduction for the spouse who provides it. If you are getting a divorce, talk to your tax pro to ensure that support payments you receive will be allocated properly between alimony and child support.
- Track tuition, books, computers, and fees that you pay on behalf of your dependent child because you may be able to claim an education credit or deduction for the amounts you pay. And remember, if the child goes away to school, and you are providing more than 50% support, you may still claim head of household status even during the absence of the child.
- If you are going through a major life change including, marriage, divorce, purchase of residence, loss of a residence, changing jobs, or becoming self employed, be sure to identify the tax ramifications of your new course, and consult a pro if necessary.
Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, CA and the author of Entrepreneur Press book, “Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn’t Want You to Know.” Follow Bonnie Lee on Twitter at BLTaxpertise and at Facebook.