Filing your taxes for the first time is a daunting task. Fortunately, you don’t need a degree in finance to navigate the process. Setting aside enough time to gather all the necessary documents and fill out your tax forms correctly is essential. The average American spends about 13 hours preparing their tax return. It’s important to start early and take your time with the process to avoid errors.
Ensuring Smooth and Easy Filing
Understanding your tax bracket is crucial, especially if you and your spouse have different income levels. Knowing your tax bracket will help you calculate your tax liability accurately and avoid surprises when it’s time to file. You can find your tax bracket by looking at the IRS tax tables or using an online tax calculator.
If you own a home, you can likely deduct mortgage interest and property taxes. This can be a significant tax break, especially if you live in a high-tax state or have a high mortgage payment. Keep track of your mortgage interest and property tax payments throughout the year to ensure you claim the correct amount.
You may be eligible for a tax deduction if you have student loans. The interest paid on student loans can be deducted up to a certain amount, which can help reduce your tax liability. It’s important to keep track of your student loan payments and consult with a tax professional to determine your eligibility. Charitable donations can also provide a tax benefit. However, it’s important to ensure that the charity is registered and that you have documentation to support your donation. You can find a list of qualified charitable organizations on the IRS website.
Understanding Your Tax Bracket and Other Crucial Factors
The decision to file a separate or joint tax return with your spouse depends on your financial situation, so weighing the benefits and drawbacks of each filing status carefully is essential. Remember that you must be married on the last day of the tax year to file as a married couple.
Some tax benefits are only available if you file as married filing jointly. For example, student loan interest deductions, tuition and fees deductions, education credits, and earned income credits are only available if you file as a married couple. Filing jointly can also provide a higher standard deduction, reducing tax liability.
If you owe back taxes, filing jointly can put your spouse at risk of penalties and interest. However, the IRS offers the Injured Spouse Allocation form, which can help protect your spouse. This form allows you to allocate payments to the spouse who doesn’t owe back taxes, protecting their share of the refund.
Before deciding how to file, it’s essential to research and uses tax software to fill out practice forms for both married filing separately and married filing jointly. Based on your input, some tax software will automatically determine which method will yield the lowest tax liability.
Prompt Financial Planning and Securing Your Assets
Lastly, having conversations with your spouse about financial planning is important. 78% of millennials and 64% of Gen-X don’t have a will. If you fall into this category, it’s essential to consider creating one. This ensures that your assets are distributed according to your wishes in case of your demise.
Additionally, even during impulsive, unplanned burglaries, more than 50% of intruders said they would discontinue the burglary if they discovered an alarm. Therefore, securing your home and belongings is crucial to avoid any losses.
Filing joint taxes for the first time can be overwhelming, but being prepared can make the process smoother. You can file your taxes accurately and efficiently by understanding your tax bracket, taking advantage of any deductions, and having a solid financial plan with your spouse.
