Tax planning includes determining filing status
Single or married? Kids or no kids? These are just a couple of questions that will help someone determine their tax filing status. Taxpayers usually only think about their filing status when filing their returns. However, this is something to think about all year, especially if it changes.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.
Here are some things about filing status that taxpayers should consider now:
A taxpayer’s filing status is used to determine their:
- Filing requirements
- Standard deduction
- Eligibility for certain credits
- Correct amount of tax
If more than one filing status applies to someone, they can use the Interactive Tax Assistant to help them choose the one that will result in the lowest amount of tax.
Changes to family life may affect someone’s tax situation. These changes include:
- Birth of a new baby
- Adoption of a child
Typically, a taxpayer’s status on December 31 applies to the entire year for tax purposes. For example, if someone gets married late in the year, for tax purposes they’re considered married for the entire year.
The IRS has several tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.
Call WXC for more details.