Raising kids is hard enough with help, but a single parent has a unique set of challenges when it comes to filing taxes. Here are a few tips to keep in mind that will help you navigate the upcoming tax season.
Check Your Filing Status
Let’s cut straight to the point. Depending on if you qualify, be sure to fill as head of household, rather than single. Filing as head of household usually gives you a lower tax rate, compared to if you file as single or married filing separately. In addition, it also allows a higher standard deduction. Are you unsure if you qualify for head of the household? Your financial advisor can help you determine if you qualify.
Be the First to File
If you ex plans on marking your kid(s) as dependent(s) when in fact you are entitled to the deduction, make sure to file your taxes first. Whoever files first gets the deduction. Bottom line is that filing first will enable you to pay less taxes overall, as well as you’ll be able to claim a higher standard deduction. If for some reason you are not able to file first, but you’re entitled to the deduction, it will be up to you to make a case for it.
Keep Track of Documentation
Keep all important information relating to your entitlement of deducting your dependent stored in a safe place. Even better, designate a file for tax purposes only. The file should contain the following paperwork:
- statements from child care provider
- school records
- tuition payment receipts
- records proving that you provided more than 50% of your child’s support
The tax code is complex, but it’s not impossible to decipher, especially when you rely on a financial advisor. William Wolske, CPA encourages you to make use of tax credits and deductions that can help reduce your taxable income and reduce the amount of tax you pay. With the right planning, tax time doesn’t have to give you a headache. Schedule your free consultation today to receive assistance when it comes to handling your finances and money saving goals. Contact our offices at 843.706.9644. We’ll go through your financial situation together, so you can have a financially happy tax season!