DINK’s Taxes

by Dual Income No Kids on March 17, 2008 · 0 comments


It’s about that time to be dealing with the old tax man. James & I set aside time on Saturday to discuss the ins and outs of our tax situation this year.

Last year was our first year filing jointly, and we were amazed to see our first round of taxes to tally out at a whopping seventy pages! Most couples may not start with such complicated finances, but in our case we both had different financial issues that added to the general complexities.

The thing about taxes are that they change as your life does. For us we are still wondering how long it will take for two relatively consistent years in a row. I’m thinking it will likely be some time in the future, if ever.

While last year it was challenging, this year we are trying to sort out how my international work will affect our taxes. We still have many questions unanswered, but it seems that we may have to file for an extension until the end of September so that I can file based on being overseas for a year. This means that we’ll have to wait for our return, but it will be well worth it.

This will also affect our taxes in 2009, as my contract will have me work two 12 month periods that don’t align with the calendar year. Luckily the tax system is smart enough to recognize that most international contracts are signed on an annual basis.

The outcome is that the first $85k is not taxable while I’m working abroad. This obviously isn’t an insignificant amount of money, so it is worth our while to make sure that we are filling appropriately. The next step will be looking into changing my deductions so the money isn’t taken out in the first place.

Being that we aren’t in the same place, James had to do the physical aspect of putting together all of the documents that we needed to send to the accountant. We did brainstorm together to see if we were keeping everything in mind. In addition to this we googled to make sure we weren’t missing any possible deductions.

After putting this altogether we wrote a note to our tax accountant and sent it off in the mail to her. In past year’s we’ve practiced with a mock 1040 so we could double check the results, but this year the complexities were beyond that.

Tips for couples approaching joint taxes (most are the same for individuals as well):

  • Set aside some time to discuss; such tasks are easier if you can prepare yourself for them.
  • Taxes are a whole lot easier if you have everything you need in front of you, so do yourself a favor and put any tax related items in one easy to find place.
  • Put everything together in one package.
  • Double check to make sure you aren’t missing any deductions; a google search is helpful.
  • It can be a good idea to do a mock 1040 so you can cross check with your accountant.
  • Direct deposit is recommended to put money in your pocket faster and to save your tax paying money.
  • If you taxes are simple, keep in mind that turbo tax is free if you go to the site through the IRS website. This will save you thirty bucks or so. I’ve found this to work well in the case of less complexities.
  • If you file electronically pay attention to credits for buying a house or things like that, in our case DC couldn’t do this through the electronic system and it took me months to get my $2,500 tax credit back when I was a first time home buyer.

Readers: If you have other examples of things you find helpful to keep in mind we’d love to hear from you!

Good luck with your taxes!

Miel

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