Thursday, February 18, 2010

Love and Taxes (Death and Taxes is easier)

Valentine’s Day has come and gone. Hopefully love was abounding. That’s said; let’s take a second to embrace the inner nerd in the quest for saving money. When it comes to matters of the heart at higher levels such as marriage, income tax becomes a chess piece. Filing jointly you get breaks, but you are also in a higher bracket now which means higher tax rate.

Once the ring is on the finger, the scene changes. Sometimes one spouse wants to leave the rat race and build the nest. If the budgeting and career planning are correct, families can flourish. Of course there are others like newlyweds, which have everything, but taxes on the brain. They never thought about the credit of the other, nor were financial issues like outstanding student loans ever discussed prior to the exchange of vows. Many lose out on larger returns because they don’t realize that if most of the year they were not married, then they can still file as single. And what if you are marrying someone with kids?-kids that you are planning on taking care of. Well, there are a few ways to capitalize on that situation too. Ensure the support you are providing is deducted via medical expenses, Earned Income Credit or Child Tax Credit.

Love doesn’t always work out, nor is it always true at face value. Divorce is never auspicious for both sides. Manipulation over control of assets and the claiming of exemptions and benefits for children he/she isn’t entitled to claim make the process very messy. It gets even more confusing when both parties supply equal support.

And believe you me, there are a number of people out there who have managed to see the tax fraud availability in marriage. Audits all around. Some people like to file as head of the house and get their EIC even though they are married and don’t qualify if a joint return was filed. Some people try to claim their family members kids; of which they have never given support to or maybe even met. Fraud in love? Who knew…


TaxFiling.net

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