Taxes

Wedded Bliss and Taxes: How You File Will Affect How Much You Owe

Wedding couple strolling down street by The Inn at Penn

“Wedded Bliss and Taxes: How getting married and how you file (jointly or separately) affects how much you will owe in taxes” is a guest post offered by H&R Block’s Leigh Mutert, CPA and hrblock.com Community Manager. 

She’s also given us FREE copies of H&R Block Federal Premium Edition!  It’s tax season time and who wouldn’t want something premium for free :) We’re giving away FOUR copies. To enter – Comment, Like, & Tweet this article!  The winners will be announced on Sunday, Feb. 20th.

The Inn at Penn

How you file can mean tax savings in your pocket.

Marriage means compromise. It means negotiation. It means having to decide a million things as a couple: where to live, when to have kids, how to juggle the holidays between all the in-laws.

Your status on the last day of the year determines your filing status for the entire year. If you’re married, you and your spouse can choose to file a joint return or file separate returns. Unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns) to determine which filing status is best for you.

Most taxpayers claim the standard deduction — a fixed amount that reduces the income on which you are taxed. Here are the standard deduction amounts according to filing status.

  • Single or Married Filing Separately: $5,700
  • Married Filing Jointly or Qualifying Widow(er): $11,400

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Top 10 Ways to Avoid an IRS Audit

Red FlagContrary to popular belief, it is possible to drastically decrease your chances of suffering an IRS audit through several proactive measures. While not fool-proof, simply considering taking these steps will go a long way to helping you avoid the headaches that an IRS audit can bring. Being aware of the IRS audit process – as well as common red flags – will position you much better to avoiding an audit.

Here are several tips to help you avoid an IRS audit:

  1. Be truthful 100 percent of the time: Many people still do not realize that the IRS has a complex computer system meant to catch lies and mistakes on tax returns. If you are not being truthful, there is a much better chance that your return will be audited.

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What to Do If You Owe Taxes to the IRS

IRS Payment Plan versus Borrowing Money

If you owe taxes to the IRS it is important to remember that you are not alone and that each year thousands of people are left in debt after finishing their tax return. Regardless of the severity of your current financial situation you have several viable choices, most notably the following:

  • Pay taxes using a credit card
  • Request an IRS Payment Plan
  • Receive a loan from an outside financial institution or contact (e.g. bank or family member)

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Convenience Tax: You’re Only Charging Yourself

 

Often people lump debt into one of two categories – “good” debt and “bad” debt.

Typically good debts refer to student loans, business loans, and anything resulting in your general betterment. Bad debt includes all of life’s temporary luxuries.

There’s another side of debt many people don’t often consider. Not a separate group, it’s more a subcategory to both good and bad debt .

What I’ll call the “Convenience Tax” refers to our preference towards making things easier. Not completely unwarranted, with the technologies available this day in age, why would you go out of your way to make yourself uncomfortable?

Because these conveniences are adding

unnecessary debt to your balance sheets.

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