When you celebrate a happy event, such as a marriage or the birth of a child, taxes might not be the first thing on your mind. However, you’ll need to give them some thought after you get back from your honeymoon or when your baby is sleeping.
As couples and parents navigate tax season, it’s important to keep your paperwork organized, update your withholding, and know which tax credits you qualify for, according to Henry Grzes, lead manager of tax practice & ethics for the American Institute of CPAs.
You have until Tuesday to file your 2024 taxes. You can request an extension until October 15 if you run out of time.
If you are filing taxes as a new mom or newlywed, follow these professional tips.
Maintain organization
Regardless of the year you filed, it’s a good idea to keep your tax records organized.
According to Tyler Horn, a certified financial advisor and head of planning at Origin, a financial planning software, having images of your tax paperwork in a folder on your computer will help you keep everything organized.
Simply snap a photo with your smartphone, send it, and store it in that safe location on your computer. You’ll have everything together that way,” Horn remarked.
Keeping your records for the future is also a good idea. Depending on your circumstances, the IRS advises keeping your records for a minimum of three years and a maximum of seven years.
If your last name has changed, update it.
You must ensure that your official documentation reflect any changes you made to your last name.
If you decide to change your name, you must notify the Social Security Administration because your tax return must match your Social Security number.
People frequently neglect to make this adjustment in advance, which causes them to make errors on their tax returns.
“That is something that people don’t always consider, and sometimes it’s too late when they do,” Grzes stated.
On the Social Security Administration’s website, you can learn more about changing your name.
Decide whether to file separately or jointly.
Whether you decide to file your taxes jointly or individually is one of the most significant changes that occurs when you get married, according to Horn.
Each couple should examine their unique circumstances in order to make this choice. According to Horn, filing jointly may be the best option in the majority of situations, but it’s not always the case.
You can access additional tax credits and deductions when you file jointly, which is one advantage.
According to Grzes, it’s crucial to understand that if a couple is married on December 31st, the law considers them to have been married for the full year.
Accordingly, the IRS considers you married for the entire year if you were married in the summer.
The IRS website has further information about each filing status.
Make changes to your W-4 form.
You must update your W-4 form with your employer if you intend to pay taxes jointly with your spouse.
The purpose of revising your W-4 is to update your tax withholding and reflect your new filing status—from single to married.
Recognize the tax benefits and deductions that are available.
When completing your taxes, it’s critical to know the tax credits and deductions you are eligible for, according to Horn. The Earned Income, American Opportunity, and Lifetime Learning tax credits are pertinent for married couples.
You can choose to itemize or take a standard deduction when it comes to deductions. Generally speaking, itemizing is only beneficial if the total of your itemized deductions exceeds the current standard deduction of $29,200 for a married couple.
According to Grzes, there are situations in which filing jointly with a spouse can disqualify an individual who was previously eligible for the Earned Income Credit as a single filer.
Grzes advises working with a tax expert in advance to prevent unpleasant surprises while you’re filing your taxes.
Get your youngster a social security number.
According to Grzes, it’s critical that you get your child a social security number as soon as possible. You can apply for a number of new tax credits the first time you file your taxes after the birth of your child, but you can only do so if you identify them as a dependent.
“You must have a Social Security number and include it on your return if you plan to claim your child as a dependent. If not, the IRS will reject you,” Grzes stated.
Hospitals typically allow you to register for a Social Security number. But you can also apply at your local Social Security office or online.
Parental tax credits
The IRS provides a number of tax credits, such as the Child Tax Credit, Childcare Credit, and Adoption Credit, to help offset some of the costs associated with having children. The Earned Income Credit, which is still determined by your earned income and the number of children you have, is also still available to parents.
Additional tax advantages
Opening tax-free accounts, such a 529 or flexible spending account, can help parents.
While a 529 account enables you to set away funds for educational expenses, a flexible spending account (FSA) enables you to set aside pre-tax money for childcare and healthcare needs.
Source: AP News
