People often  hold on to many myths when it comes to taxes.  Below is a list of those myths and how you can save money by separating fact from fiction.

Students are exempt.
A lot people think there’s an exemption for students, but students must pay taxes on all of their income, no matter how many credits they are taking or whether they are a full-time student.

There are special credits for students, though, such as, the Lifetime Learning Credit and the new American Opportunity Credit. Distributions from a 529 Plan are tax-free, but the income is taxed.

Students who during the summer check the “exempt” box on their W-4′s, but if they didn’t have any taxable income last year and don’t expect to have any this year, then they have nothing to claim.

I can’t claim my working child as a dependent.
If you are providing more than half your child’s support, they qualify as your dependent, and you can deduct any costs you paid for that child. Support is what’s spent, not what’s earned.

You can also qualify for an exemption if your child doesn’t earn more than the value of the exemption.

A child qualifies as a full-time student if he or she is a full-time student for at least five months during the tax year.

I can sell my house tax-free because I’m over age 55
The old law was that if you were older than 55, you could eliminate as much as $125,000 in gains from taxes, but you could only do that once. The new rules are even better.

Under the current law, age doesn’t matter. If you sold property that was your principal residence for at least two out of the last five years, you can exclude as much as $250,000 in gains, and $500,000 on a joint return. You can take the gain exclusion every two years if you qualify.

I can deduct my sales taxes too
If you file a Form 1040 and itemize your deductions on Schedule A, you can claim either state and local income taxes OR state and local sales taxes, but you cannot claim both.  If you decide to claim your sales taxes, you have to make sure that you save your sales receipts throughout the year so that you can add up the total amount of sales taxes you paid. 

If you were not very good about saving all of your receipts, you can choose to claim your state and local sales taxes instead.  One other option would be to fill out the worksheet and use the general sales tax tables found in the Instructions for Schedule A (Form 1040), but you can also use the IRS Sales Tax Deduction Calculator. 

I have to file a joint return if I’m married
If you’re married, you can always file married filing separately. You will pay more in taxes by doing so, but in some situations, this can be to your advantage.

If you’re married, you can’t file as single or head of household. However, if you’re separated and you have a child there are provisions that will let you file as head of household. Speak with a tax professional to get the most accurate information.

The tax codes are complicated and can change regularly. If you aren’t sure of the new rules, again, seek the advice of a tax professional.

Daniel Stoica Accounting Professional

June is unofficially the “wedding month” since that’s when many couples tie the knot. It is also the halfway point to the end of the year, which means keeping your tax changes in the back of your mind.

When you are planning your wedding, your taxes are most likely the last thing on your mind, but there are a few things to think about that will keep tax issues from bothering you while you are concentrating on your big day. If you are currently planning your wedding, or if you just recently got married, look into your new tax situation. You can save some money and maybe even keep an eye out for a possible future refund check.

Once you are married and settled, the first things you will need to take care of are name and address changes. Then, when tax season gets closer, think about whether or not you’ll itemize deductions, which tax return form is right for you and your spouse and what filing status you’ll use. A tax professional can help you with these issues.

There are a few things you should take into consideration as tax time approaches.

-Make Certain You Use Your Correct, Legal Name

You must provide your correct, legal name and identification number to claim exemptions on your tax return. If you changed your name when you got married, make sure you update your Social Security card right away so the number matches your new name when you file your taxes. Use Form SS-5, Application for a Social Security Card.

-Did You Change Your Address?

If you and your spouse have moved to a new address, get a change of address from the Post Office so they can forward any tax refunds or mail from the IRS. The Post Office will also send your new address to the IRS so they can update their records. You should probably contact the IRS, as well, by filing Form 8822.

-Are You Expecting a Refund Check?

Every year, the Postal Service returns thousands of tax refund checks, mainly because the addressee has moved. Notifying both the Postal Service and the IRS of your address change as soon as possible will ensure the delivery of any refund checks you may be waiting for. To check the status of a pending tax refund, go to the IRS web site and use the “Where’s My Refund?” service.

-Your Filing Status Will Probably Change

Your marital status as of December 31st will determine if you are considered married for that tax year. Married couples have the option of filing their federal income tax return either jointly or separately in any given year. Choosing the right filing status can save you money.

Filing a joint return (Married Filing Jointly) allows spouses to use their combined income and take combined deductions and expenses on a single tax return. Both spouses must sign the return. Both spouses are also held responsible for the contents.

With separate returns (Married Filing Separately), each spouse is responsible for their own tax return. Separately, they sign and file, and each is responsible for his or her own tax return. They are taxed on their own income separately, and can only take his or her individual deductions and credits. If one spouse itemizes deductions, the other must do the same.

Which filing status is right for you? It depends on your specific situation. You should consult with a tax professional to determine what situation is best for you and your new spouse.

Daniel Stoica Accounting Professional