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5 Things to Double-Check When Doing Your Taxes Thumbnail

5 Things to Double-Check When Doing Your Taxes

Taxes

Tax Preparers have a standard answer when someone asks a question about their taxes that they're completing on TurboTax..."Ask the Box". The Box probably won't answer your question. You should probably check a few things that might need to be adjusted from the output the software provides you, too. You also might want to ask your tax preparer about some of these (if you have one). Here are a few:

  • Should you itemize even when you "can't"? The standard deduction for a married couple is $24,400 and for a single taxpayer it is $12,200. You can elect to itemize even if your deductions are lower than this amount. And, you might want to. This is because some states require that you take the standard deduction on the state return if you take the standard deduction on your Federal return. A lot of states have standard deductions that are pretty low. For example in VA it is $9,000 for a married couple and $4,500 for a single taxpayer. So in some cases, your Federal taxes will go up less than your state taxes will go down if you itemize and are below the standard deduction
  • Deduct sales tax instead of income taxes as an itemized deduction. If you live in an area with high levels of property taxes they may come close to or even exceed the State And Local Tax (SALT) deduction limit of $10,000. If you're over the $10,000 SALT limit or close to it and sales tax will get you to or over the SALT limit, then use it. That way you won't have to declare state income tax refunds as income next year.
  • Don't forget allowances and VA Disability compensation. If you live in a state without income tax and deduct sales tax or if you're deducting sales tax for the reason above, you can include your tax free income when calculating the amount of your sales tax deduction.
  • Double check your state income tax refund. Depending on whether you deducted state income tax, your state income tax refund could be taxable. If the combination of the income tax deduction and property tax deduction exceed $10,000, then the amount of the state income tax that will be taxable will be reduced.
  • Check on your spouse's state of residency. Under a law passed at the end of 2018, military spouses can claim the same state of residence as the military member without ever actually residing in that state.

Tax laws are constantly changing and new rules and court cases change interpretation of the law are as well. For some reason, we like to keep up with those changes and we'll keep you informed.

This article was based off an article, written by Curt Sheldon, that originally appeared in Military Officer magazine.


If you found this article interesting, you like the following blog posts:


Retired Military Finances 101: State Income Tax


Military Finances 301: The Potential Tax Tripwire When You Refinance Your Mortgage


Military Finances 301: Mom (or Dad) Missed Her RMD. Now What?





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