Armed With These Tips Women Can Face Their Fears When It Comes To Tax Returns

While many people have their concerns when it comes to filing tax returns, women can be especially leery of covering all the areas that warrant a deduction. There are also certain instances for women that can be challenging when having to navigate unchartered territory, such as those who have recently divorced or the death of a partner who always managed the taxes.  

A basic overview and education by a qualified CPA on what the IRS expects to see in a return can be tremendously helpful in grasping and understanding how this system works. Some of the areas covered in such a session would include the following:

  • Statement of income, which includes salaries, IRA distributions and dividends; whereby the bottom of this page totals up adjusted gross income
  • The summary of deductions as well as any credits a taxpayer is entitled to, determined by subtracting deductions and credits from AGI results in an item called taxable income.
  • Schedule A, the “itemized deductions” page that sums up interest deduction on a home mortgage, property tax, charitable contributions and medical expenses above a certain level, including long-term-care insurance.
  • Schedule B, the “interest and ordinary dividends” page that totals income from investments such as CDs, stock dividends and bond interest.
  • Schedule D, “capital gains and losses.” This form–one of the most complicated schedules in the IRS’ broad array of schedules–indicates whether the taxpayer must pay taxes on long-term and short-term gains from the sales of assets. Sales on losses listed here reduce taxable income.

Once understanding the five basic components of the return, there are various deductions that are often overlooked. Forgetting to take these itemized deductions can add up! Here are a few that qualify:

  • Child care expenses:  Your child care provided needs to provide a statement on how much you paid, and in order to take the credit you will need their federal ID number or social security number and address.
  • Tuition, books, computers, and fees: If you have a dependent child in which you pay on behalf of them you may be able to claim an education credit or deduction for the amounts you pay. And remember, if the child goes away to school, and you are providing more than 50 percent support, you may still claim head of household status even during the absence of the child.
  • Major life changes: Understand your tax ramifications if you have married, divorced, purchased a residence, had loss of a residence, changed jobs, or have become self-employed.
  • Max out retirement account contributions: According to the U.S. Department of Labor, 39 percent of female workers are covered by private pension plans, compared with 46 percent of male workers. And when retirement time comes, 32 percent of female retirees get pension benefits, compared with 55 percent of men. Add to that the sad fact that a woman still earns only 76 cents for every dollar a man earns. Get the best tax benefits by contributing as much is allowed.
  • Do not rely on tax money: If you are expecting a large return, hold off on spending that amount before it is confirmed how much you will receive back. Many people will expect a large return and buy new furniture, a car, and other spendy items before receiving their refund. The amount you are expecting back can change, so be wise and wait.
  • Consider your filing status: Eligible single women can get a sizable tax break by filing as Head of Household. Head of Household status requires that you paid more than 50 percent of all expenses associated with keeping up a home and have supported at least one dependent for at least six months out of the year. In addition, single women who have no children, but whom have cared for a dependent family member, can also qualify for Head of Household status.

It can be timely and make one weary in trying to keep up with the many tax laws, but by better understanding the various deductions you will be in the best position to keep those dollars in your pocket as appropriate!  Qualified professionals can be invaluable while many times proving a return on investment for their services, since they are well-versed in all areas of tax law and can identify appropriate candidates for different deductions.

If you need assistance in filing your 2016 taxes, or strategizing your 2017 tax planning and financial goals, barton CPA is a reputable Coachella Valley firm and offers a complimentary consultation.

barton CPA
Phone (760) 969-6499

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