OK, folks: We're down to the wire now that this year's tax filing deadline is less than one week away. Since it's probably too late to go out and hire a tax preparer at this point, you may be on your own with regard to your 2017 return. The good news is that most of today's tax-filing software is designed to guide you through the process, even if you're a relative newbie. And to make your life even easier, here are answers to some of the most pressing questions you might have at this stage of the game. You're welcome.
1. Do I have to file a joint tax return if I'm married?
This is a valid question if this is your first tax-filing attempt since tying the knot, and the answer is no, getting married does not obligate you to file a joint return. That said, in most cases, you'll get the maximum tax break by filing jointly with your spouse.
Joint filers get the highest standard deduction available, and for 2017, that number is $12,700. File separately, and you'll get just $6,350 on your own return. Filing jointly might also enable you to capitalize on certain deductions. And if you're going after valuable tax credits, which you should be, you should know that filing separate returns might render you ineligible for some of them, like the Earned Income Tax Credit.
Of course, there are always exceptions to the rule, and in some cases, filing separate returns as a married couple might be the right way to go. The best way to know is to run both sets of numbers and see which scenario helps you make out the best.
2. Can I itemize on my taxes if I don't own a home?
Owning a home is by no means a prerequisite to itemizing on a tax return. That said, filers who aren't homeowners often struggle to come up with enough deductions to surpass the value of the standard deduction, thus negating the point of itemizing.
As stated above, for 2017, the standard deduction is $6,350 for single tax filers and $12,700 for couples filing jointly. If your various expenses exceed these figures, then go ahead and itemize, homeowner or not. Some items you might manage to write off are charitable donations (both of the cash and non-cash variety), unreimbursed business expenses, and job-related moving expenses.
3. Can I deduct medical expenses on my taxes?
Yes, if you're itemizing, and if those expenses exceed 7.5% of your adjusted gross income (AGI). Keep in mind, however, that you can only write off those costs that surpass that 7.5% threshold. This means that if your AGI is $100,000, and you rack up $7,600 in eligible medical expenses, only that last $100 is deductible. Furthermore, you'll need solid records to back up your claims.
4. Are there special tax breaks for parents I should know about?
Absolutely. First of all, for each dependent in your household, you're entitled to a $4,050 exemption. This means that if you have two children, $8,100 of your income is exempt from taxes. (Note, however, that the tax code has done away with these exemptions effective 2018, so 2017 is the last year you can claim them as of now.)
Additionally, there are several tax credits designed to offer parents some degree of relief. The first is the Child Tax Credit, which is worth $1,000 per child in your household under the age of 17. This credit, however, phases out at higher income levels. There's also the Child and Dependent Care Credit, which might put some money back in your pocket if you paid for child care in 2017 in order to work or look for work.
5. Can I claim my pet as a dependent?
Sorry, but no.
6. What happens if I'm late with my tax return?
If you don't submit your return by this year's April 17 deadline and you don't owe the IRS money, then being late won't impact you negatively other than perhaps delay any refund you're entitled to. But if you miss the deadline and owe money on your taxes, you'll face a failure-to-file penalty equal to 5% of your unpaid tax bill for every month (or partial month) your return is late, up to a maximum of 25% of the amount you owe the IRS. Additionally, if you underpaid your taxes in 2017 and file your return more than 60 days late, you'll face a minimum penalty of $135 or 100% of your unpaid tax bill -- whichever is smaller.
Not sure if you owe taxes? Then play it safe and don't be late. If you get moving now, you have a strong chance of getting your return done on time.