With 35 years combined experience, Shelly Larson and Sheila Boldon are hard at work this tax season both preparing and answering tax related questions. Larson, a CPA since 1985, has spent her fair share of time organizing and preparing locals’ taxes and this year she has brought in Boldon, a bookkeeper and income tax preparer, to assist her during the busy time of year. While taxes have the ability to be a large and daunting task, they don’t have to be. Both Larson and Boldon have taken the time to answer some frequently asked questions to help ease your tax time preparations.
1. When can/should I file my own taxes? The IRS won’t accept tax returns to be electronically filed until Jan. 29, 2018. Many people don’t receive all the necessary information from payers by that date but may want to file as soon as they can. Filing as early as possible can help to avoid identity theft issues. Thieves in possession of personal information may try to file a return using your social security number and filing early can avoid these issues, although this is an infrequent problem and the IRS has tightened their processes to thwart these law-breakers.
2. What is the cutoff amount that I can make before I have to pay taxes? In general, if a single person earns over $10,400, they must file a return. If they have dependents, have received premium tax credits toward health insurance through Obamacare, or have other unusual circumstances they may need to file and/or pay.
3. What is the difference between itemizing and non-itemizing? A single person in 2017 can use a standard deduction of $6350, or they can total certain personal expenses to determine if those expenses exceed $6350. If they do, then “itemizing” those expenses may benefit them by giving a larger deduction than the “standard”.
4. Are my college classes deductible? The cost of tuition, fees, and books are generally beneficial to most taxpayers. Whether the student is full-time, part-time, undergrad or graduate student; whether scholarships have been received or expenses paid out-of-pocket, there are particular methods and choices that can be made to maximize those deductions and tax credits, frequently to great benefit! This topic is beyond the scope of a short answer but should be evaluated by all students to receive the best tax benefits under the law.
5. I have student loans but they aren’t in the repayment process yet, do I still claim them? No. You must wait until payments have been made before you’re able to deduct student loan interest.
6. For married couples, what is the difference in filing separately and jointly? Which is better? Generally, filing jointly is more beneficial for married couples, but in certain situations they may choose to file separately. Filing separately results in the loss of certain tax benefits. However, if one spouse has significant medical expenses, if one spouse has a tax judgement, if one spouse has significant capital gains, or if one spouse doesn’t want to sign a tax return and accept joint liability for the tax bill due to the other spouse’s income,these reasons to file separately.
7. My significant other and I just got married earlier this year but have not lived together for the entire year. Should we file jointly or separately? Marital status is determined on the last day of the year. So, if you were married on New Year’s Eve, the IRS considers you married for the entire year. Unless you have special circumstances, the best choice will be to filing jointly rather than to file as “married but filing separately”.