05 Mar 5 Tax Musings from a Family Law Attorney
By Tonya Graser Smith
As we’re in the midst of tax season, I offer these tax musings. I’m not even calling them tips per se, but tax musings from a divorce lawyer. Here goes.
- Fun fact: Did you know that in a matter of minutes you can get your entire tax transcript (a.k.a. a previous year’s filing) from IRS.gov? You can, and it’s free. So if you need a past return in a hurry, this is a good thing to know. You still should hold onto past returns for three to seven years, depending on your particular circumstances. You can find out more about that here on IRS.gov.
- There’s this myth that you always pay less tax if you are married filing jointly versus married filing separately. This is a myth. If you are divorcing or have recently divorced, you might be able to file jointly (say if you were married for much of the year) or separately, and either way could be the more or less advantageous. Don’t assume one is the way to go without first consulting with your accountant or other tax professional.
- Speaking of tax professionals, even if you are paying someone to prepare your filing you will pay them less if you hand over organized files. This should be obvious. But you’d be surprised how many people hand their accountants a shoebox filled with a year’s worth of unorganized receipts.
- You also might be surprised how many people live life always a year behind when it comes to their taxes. They file all the extensions they can and pay all of the interest and penalties so they can procrastinate, filing and paying taxes one year late. Why? I don’t know. It’s like it becomes a way of life, something people can’t get out of the habit of doing. You know what this means if you are divorcing? It means a longer drawn out period of time in which you have to interact with your ex on household finances. Who wants that? Break the extension cycle ASAP.
- A final word on getting ahead. Right after you file taxes this year is a great time to talk with your accountant about what to do to save money next year. If you own a business, maybe now is the time to form an S-Corporation. If you have been trying and failing at doing your own bookkeeping, maybe now is the time to hire a professional bookkeeper or learn how to use software like Quickbooks Online.
Whether you are married, single, divorced or separated, there are only two things certain in this life – and one of them is taxes. It pays to get ahead and stay ahead.