By: Lis Huber and Julia Bellotti
It's that time of year, the dreaded date of April 16th is next Sunday and you still haven't filed your taxes. Procrastination isn't just for students, it seems.
A few weeks back you asked us questions about taxes and we (finally) answered them. We did the research so you don't have to. Now, after reading our answers, all you have to do next is sit down and do it to it. Let's get it started:
What do I do if I have had A BUNCH of different jobs in the last year? Like a job at my university, my new post-grad job? How do I handle the taxes for multiple jobs?
Julia: Each job should send you a W-2 form at the end of the year or the beginning of the new year. Save these W-2 forms!! You will need to submit all of them when you do your taxes (before or by April 16th). See this article for information on how to enter multiple W2s in TurboTax.
Do I get a tax credit for adopting a dog?
Lis: Unfortunately, there are currently no tax credit options for adopting a dog. But, you may be able to claim tax credits for your dog(s) in other ways such as if they are guide dogs, if you moved with your dog, or if you fostered dogs. See this article for more specifics on dog-related tax credits.
Someone told me that scholarships and stipends are things that they charge you taxes on, is that true?
Julia: “A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution,” – a quote from an article on the IRS website. See here for what makes an institution eligible for tax free grants.
I'm a training consultant with clients around the US; last year was my first year. When filing my taxes, do I need to file everything in my home state like I used to or now do I need to do taxes for each state individually?
Lis: The complicated answer is, it depends on your company and how said company handles its finances. From what it sounds like, you will likely need to file for the state in which your company's headquarters reside, as long as you reside in the same state. However, like I said, it depends. Below are a few articles that might be helpful in answering your question.
How do you handle state taxes when you’ve moved different states within the year?
Julia: From how I’ve done it with TurboTax, you file in both states and then you’ll end up being deducted for the time you didn’t live there.
Lis: I just filed my taxes today via TurboTax after moving from VA to FL in the last year. It was pretty easy – I just had to file my taxes for each state individually, which was relatively simple due to my two W-2's coming from each respective state. Note: you can potentially receive tax deductions for moving expenses, so make sure to keep good track of your expenses when you move. See if you're eligible for moving expense deductions here.
How do you handle state taxes when you work remotely and your company’s headquarters are in another state?
Lis: Unless you live in the following states, you will likely need to do taxes for the state in which YOU reside, not the one in which YOUR COMPANY resides. Your company handles the taxes for that state, you need to handle your taxes for your state.
See this article for more information.
What are some expenses that are tax deductible that one wouldn't really think of?
Lis: Like I mentioned, moving expenses are something that many may not realize can be tax deductible. There is also the aforementioned article about tax deductions for owning certain types of pets. You can also get tax deductions for charitable donations, so make sure to keep your receipts from Goodwill when you do your spring cleaning this year! Below are a few articles that might offer some more suggestions.
Can I write off my commute/mileage driving to and from work or is that only for people who drive for a living/always on the road and don't have an actual daily office?
Lis: This one was a bit difficult to answer so I might be wrong here; feel free to correct me if I am. It seems like you might be able to receive tax deductions for mileage in the following situations: if you're self employed, if you drove somewhere for charitable work, if you had to drive somewhere for medical reasons, or (again) if you moved in the past year. In the latter three situations, you need to make sure to itemize these deductions for them to be useable. Note: a daily commute is NOT eligible for a deduction, but you CAN deduct mileage for travel to/from off-site meetings, conferences, training sessions, and even when you're searching for a new job. This article Everything You Need to Know About Deducting Mileage on Your Taxes explains all of this and more in further detail.
If I NEVER get a tax return (I ALWAYS owe the government at least like $200), am I doing it wrong?
Lis: Well...the typical answer is back. It depends, mainly on your paycheck, your housing situations, and your dependent(s) or lack thereof. Check out the above answers for resources on things you might not think of to deduct from your taxes. Check out the below articles for reasons why you may be owing the IRS some money.
I got divorced and my ex and I both claim one of our children, as a head of household. How do we deal with child care expenses, which we split not half and half, when it comes to taxes? I use a pre-tax dependent care account. Can I report expenses paid for the child that I don't claim on my taxes but for whom I pay child care expenses?
Lis: This one is tricky to answer, so I would therefore suggest consulting a professional about it as I don't want to give the wrong advice. The short of it is, only ONE PERSON can claim his/her child as a dependent, even in the case of divorce. Generally the rule is, the custodial parent is the one who claims said child on their taxes. I did find some resources for you that could be useful to read through prior to reaching out to someone, but I don't feel qualified to give any further advice and highly suggest that, in complicated situations like this, you file taxes through a professional.
I bought a condo last year and had some work done on it. What should I be tracking to deduct?
Lis: Depending on what work it was you did to your new condo, you might be able to get some benefits out of it in the future. Home REPAIRS are unfortunately not eligible for any benefits, however home IMPROVEMENTS could be. This is because, unlike repairs, which simply keep your home in working order, home improvements actually increase the value of your house. Note: No matter what work it was that you did on your house, you can't get a tax deduction from it, but it could qualify for benefits when selling this house in the future. See this article for more information.
On the other hand, buying a condo/house most definitely makes you eligible for tax deductions. There are a lot of ways to go about this, so I'm just going to provide some articles that you can use for reference.
What are the differences between taxes married and unmarried and with or without dependents?
Lis: The short of it is, if you are married and/or if you have dependents, you qualify for more tax breaks. If you are single and/or have no dependents, you qualify for less tax breaks.
Upon exchanging your "I Do's" (if it is done before or by December 31st of the filing year) your filing status changes from the single life to "Married, filing jointly" (recommended), or "Married, filing separately." For example, if you got married on December 29th, 2016, you would be filing under "Married." However, if you were married on January 1st, 2017, you would be filing as Single (but not looking). Typically, based on this H&R Block article, you want to file your taxes jointly when you're married as it qualifies you for the most tax breaks.
Also make sure to read through our article on filing taxes for married couples here for some of our tips.
Regarding dependents, if you have a child, a family member, a spouse, or a significant other (who qualifies for the below conditions) that you take care of, you qualify for tax breaks. This is because the income you receive and that is taxed by the government is not all spent on yourself; instead at least half of your dependent's living expenses were paid for by you.
Can you claim your non-married live-in significant other as your dependent? When is this acceptable?
Julia: Yes, but they have to meet 3 conditions.
Read here for more.
What is the difference between exemptions and credits?
Lis: Tax deductions and exemptions reduce your taxable income, while credits reduce your tax itself, dollar for dollar.
See here for more.
If your college student works a part-time job while in school or has enough investment income to necessitate filing a return, is it worth the additional work to compare claiming the child as a dependent versus foregoing the exemption to allow the child to claim an education credit on his or her own return?
Julia: From my experience, yes, it is worth the extra work. This actually happened with my family. There was one year where it made more sense for my parents to claim me as a dependent even though I ended up owing the government a significant amount of money. It saved my family much more money in the larger picture despite the tough hit to my wallet at the time.
What does it mean exactly to claim yourself or not? On a lot of employment forms I’ve been asked to register as 0 or 1 and to be honest I have no idea what that means.
Lis: If you claim yourself on your taxes, it means you are saying that you provide for more than half of your daily living expenses. You are I-N-D-E-P-E-N-D-E-N-T (do you know what that means)?
If your parents pay for more than half of your living expenses, it means you are their dependent. You rely on them for lots of financial things, such as rent, food, clothes, education, etc.
Ultimately, if you're supporting yourself you put 1, if your parents are supporting you, put 0.
When is it smart to see a tax accountant vs. doing taxes on your own (through TurboTax, for example)?
Lis: If your taxes are relatively uncomplicated, it likely makes more sense to simply file on your own. For example, in the eyes of the IRA I'm "single," have no kids, have one job, don't own a house, etc. My taxes are therefore quite easy to get through, so I've always filed through TurboTax and have honestly been 100% happy with the result. There are two things I do want to note about doing taxes on your own through methods such as TurboTax:
1) You could potentially be missing something essential (such as a lost W-2 form, for example) that could bite you in the back later on. This is why I suggest only using this method if your taxes are relatively uncomplicated, as there is less that you are likely to miss in this regard.
2) You might be missing out on exemptions or deductions that you wouldn't have thought about by utilizing this method.
On the other hand, if your taxes are complicated, like in the case of the divorced parent earlier, I would HIGHLY suggest filing them through a professional. This is because these things can be tricky, and you'd rather be safe than sorry. Nobody wants to sleep with one eye open, worried about the IRA coming and knocking on your door. Besides, professionals often say that they can get you back more money than you paid for their services anyways, so in that case it's worth it in the long run.
Why would I buy the boxed TurboTax when there’s a free one?
Julia: I believe the boxed version is better if you’re trying to do more than the standard deduction – i.e., deducting specific line items.
Lis: My understanding is that there isn't actually a free one, but maybe I'm wrong. From my experience, you're able to go through the motions via TurboTax online, but when it comes to actually filing you have to pay. I might have been missing out on a free option all of this time, though!
Addendum: Not only is there a free version, but there are also options to file your taxes through your airline rewards program (for free) so you can get free miles! See Julia's comment at the end of this article for her experience. We all learn something new every day, and Lis will make sure to not pay for TurboTax in the future.
Should I really be saving my receipts when I make donations to Goodwill and other charities? What kind of difference does that make monetarily unless I’m making a considerable donation?
Lis: If you want to get tax deductions for your charitable donations, definitely save and itemize your receipts. Ultimately money saved is money saved; even if you don't get a whole lot out of it these savings, a little can certainly go a long way. Just like you'd be disappointed if a $5 bill was taken from your pocket, you wouldn't want to miss out on some cash money that can go towards your favorite lunch order at Chipotle (or, even better, towards your savings).
What did you think? Do you have further questions? Was there anything we missed? Let us know in the comments.