Posts Tagged ‘Filing Status (federal income tax)’

Articles

Standard Deduction vs. Itemized:

In Accounting & Finances,Business,Taxes on April 11, 2012 by Sufen Wang Tagged: , , , , , , ,

Find Your Perfect Match

To itemize or not to itemize? That is the question with personal tax returns due April 17. When choosing between a standard or itemized deduction, you’ll want to pick the method that gives you the lower taxes.
 
To do this, first figure out the amount of your standard deduction. It’s based on your filing status and can change each year from inflation adjustments. For 2011, the amounts are:

Single: $5,800
Married Filing Jointly:   $11,600
Head of Household:   $8,500
Married Filing Separately:  $5,800
Qualifying Widow(er):  $11,600
 
These numbers are higher for taxpayers who are blind and/or 65 or older. If the total amount you spent on qualifying expenses is more than your standard deduction, you can usually benefit by itemizing.  
 
However, not everybody gets to choose between itemized and standard deduction. Are you a nonresident alien, dual-status alien, or an individual who files returns for periods of less than 12 months due to a change in accounting periods? If you answered yes to any of the above, you are not eligible for the standard deduction.
 

Those in the “Married Filing Separately” category have some extra rules when it comes to deductions. If one spouse itemizes deductions, the other spouse must also itemize to claim their allowable deductions. Better dust off those communication skills and make sure you and your spouse are on the same page, that is “standard or itemized?”  Hit that “refresh” button and make sure both of your tax returns are in sync….

Now that you’ve decided on standard or itemize, the next item on your list should be to finish your taxes…
 
On the Money,
Sufen Wang
Wang Solutions
 

Articles

Filing Taxes is a Good Thing…..

In Accounting & Finances,Business,Taxes on February 17, 2012 by Sufen Wang Tagged: , , , , , , ,

When and Why You Should File
 
Tax season is in full bloom with preparer commercials flooding the air waves and “Tax Filing This Way” signs being waved on every corner. The good news is that some of you out there won’t need to go through the hassle of filing this year. The bad news is that if you don’t file a return, you’ll have no chance of receiving certain tax credits.
  
As a U.S. Citizen or Resident Alien, you only have to file if you made a certain amount of money in 2011, and that amount varies based on your age, your filing status, and the type of income you received. Let’s say you were under 65 years old at the end of 2011, single, and made over $9,500 last year.  You earned more than the minimum gross income, so you must file a return. However, if you are under 65, married, and want to file jointly with your spouse, you need to do so only if your gross income was at least $19,000. The IRS provides a handy-dandy chart with explanations for you to decide which categories apply to you. 
  
 Of course, there are all sorts of different situations that complicate these rules. Maybe you were self-employed and you made $800 last year. It might seem like a small amount, but if you earn over $400 working for yourself, you must submit a return. Or perhaps you owe certain special taxes, such as the Alternative Minimum Tax, or Recapture Taxes – once again, you’re going to be filling out a return in the next few months.
  
These are some reasons why you’re required to file, but even if none of them apply to you, you could still benefit from sending in a return. It’s the only way you can get a refund on that federal tax your employer withheld from your paycheck, or that overpayment you made on your 2010 taxes. There’s also the Earned Income Tax Credit, which is a refundable tax credit for people who worked, but barely made any money.
  
Sometimes kids are a good thing, especially when it comes to taxes. Maybe you decided to adopt last year and need help with all of the fees you paid during the process. You might be eligible for the Adoption Credit, a refundable tax credit for those adoption expenses. If your son or daughter (or both) attends college, you can offset the cost of their tuition with the American Opportunity Credit. Each student is eligible for a maximum $2,500 and 40% of the credit is refundable. It doesn’t take a math major to realize you should file a return even if you owe no taxes: you can still receive as much as $1,000 cash back for each student. So think twice before you set aside your financial records for next year – you might be missing out on the money you deserve.
 
On the Money,
Sufen Wang
Wang Solutions