The first thing to consider when filing your taxes with a new baby is your tax status. If you were single before and now support the household, you should file Head of Household instead. The tax brackets are better and the standard deduction is increased for this tax filing status. Here are some additional tax filing tips:
Consider informing your rich relative about the gift tax if they are thinking about gifting you over $14,000 for your new born. Normal gifts are not taxable, which is the good news.
Any uncovered medical expenses can be deducted once a 10% floor is applied to the deduction amount based on your adjusted gross income (AGI). To claim your medical expenses, use the long form 1040 and file a Schedule A Itemized Deductions form.
Claiming your new born as an exemption on your taxes requires them to have a social security number. File form SS5 with the Social Security Administration quickly, you will want to as soon as possible after the birth of your child. File for an extension if your taxes are due and you were not able to obtain a SSN in time.
Claim your new dependent on your taxes. You can shelter up to $3,950 in income with an additional dependent. Use the IRS tool for dependency if you are uncertain if you can claim your new born on your taxes.
When filing taxes, it is crucial to indicate your current status. This is because this status actually determines the amount of money you should pay in taxes. It may also be important in deciding whether to file tax returns or not. How do find the right filing status for your taxes?
Whenever you have to indicate your status, it is vital that you consider the last status you had as at 31 Dec. However, when you are in a situation where more than one status is applicable, it is safe to go with one that will require you to pay the lowest taxes possible regardless of whether you are using TurboTax 2014 or not.
Certain tax rules also bind same-sex married couples regardless of where you were married. If the marriage is legal (performed in a state or country that recognizes same sex marriages), then you should use the married status options in the 2013 federal tax return forms. This is mandatory even if both of you live in a state that opposes same-sex marriages. You can visit www.irs.gov for additional information about your taxes.
In order to choose the right status for filing taxes, here is a guideline that explains each of the five.
Single This status can be used with anyone who has never been married, is divorced or no longer married according to the statutes of that state.
Married Filing Jointly When filing taxes using TurboTax 2014, this status indicates that married people can choose to file one tax return as a couple. Even if your partner died within that year, you can still use this status.
Married Filing Separately This is the opposite of married filing jointly. Each spouse can file their taxes individually and it is useful when you want to reduce the taxes that you pay. Some couples also prefer this for their tax accountability.
Head of Household In TurboTax 2014 or any other means you use when filing taxes, this status is used by single people who have dependents. To be eligible, you must be the provider of more than 50% of the total costs of running a home. It is also significant to know any other rules that come with this status.
Qualifying Widow/ Widower with Dependent Child In case you are widow or widower with a child, then this is the right status for you. However, it is bound by number of conditions.
A tax filing software such as TurboTax 2014 can help you choose the right status. You can also refer to 1040 Central on the IRS website for further assistance.
Furthermore, requirements for each status can be obtained from Publication 501, Exemptions, Standard Deduction, and Filing Information on the IRS website or by dialing 1-800-TAX-FORM (800-829-3676).