In my prior blog post on “12 Ways to Save on Taxes Through
Life’s Transitions“, I gave you 12 tips on education, working and family life.
This blog post continues with 11 more tax tips to help you save through life’s
major events.
Divorce
1. Before your
divorce is final, copy all business tax returns for your spouse’s corporation
or partnership. The IRS will not give you copies of your spouse’s business
returns if you did not sign them.
2. Consider the tax
implications of paying support. Child support is not deductible, but alimony is
deductible to the payer and taxable to the recipient. If it’s rolled together
into “family support” it is fully taxable to the recipient and deductible to
the payer, just like alimony. Follow
the 5Ds for alimony deductibility. To be deductible, alimony must be paid in
dollars, under a decree or written agreement, and cease on your ex’s death.
After the divorce, you must maintain your distance (you can’t live with your
ex), and the payments can’t be designated as non-taxable or child support.
3. Keep a calendar of
the days (and nights) your child spends at your house and at your ex-spouse’s.
This will provide documentation for the courts and for the IRS (for dependency
exemptions and head of household filing status).
Business Ownership
4. Shift income to
your child’s lower tax bracket by paying your children reasonable wages to help
you with age-appropriate jobs in your business.
A child may be able to earn up to $6,200 in 2014 without paying federal
income taxes.
5. Deduct the health
insurance premiums you pay for your entire family. If you employ your spouse in
your business, you may deduct the premium as an employee benefit.
6. Deduct an office
in your home, if you regularly and exclusively use part of your home to perform
administrative or managerial activities for your business. You may be able to
deduct a portion of utilities, rent or mortgage interest, depreciation,
cleaning, and the like.
7. Read more.
Subscriptions, books, and other materials related to your field are
tax-deductible items. Ditto conferences, seminars, and courses related to your
work.
Home Ownership and Investing
8. Own your own home.
Mortgage interest and property tax deductions will save you money on your
taxes, and saving to buy a home is a wonderful use for your money after you
have contributed the maximum to tax-advantaged retirement plans.
9. Deduct points paid
on your home loan. Points paid when you acquire your home are deductible in
that year, and points paid to refinance a loan must be written off over the
length of the loan (1/30 each year on a 30 year loan). When you refinance
again, you can write off the remaining unamortized points. When you sit down to do your taxes make sure
you have records of points paid. We will
ask simple questions about your home loan and accurately calculate your your
tax deductions.
10. Contribute to
your IRA early in the year so your money has longer to grow. Although you have
until April 15 of the following year to contribute, your money will have 15-1/2
more months to grow if you contribute on January 1 of the previous year.
11. Deduct personal
bad debts. If your best friend borrows money and then skips town, you may be
able to deduct this non-business bad debt as a short-term capital loss on your
tax return up to $3,000.
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