Are you and your other half making one of these common tax mistakes?
As if relationships weren't complicated enough, we're forced to add math, paperwork and the IRS into the mix this time of year. It almost makes us want to take our chances and hide from Uncle Sam on a tropical beach somewhere. But before plotting your own escape, give those taxes another go. Consider these six big tax mistakes that couples make—and learn how to avoid them:
1. Waiting until the last minute to file. Single people make this mistake, too, but for married couples who have to coordinate their W-2s and deductions, the tendency can be even more pronounced. After all, since you can blame your significant other for the delay, it's not really your fault, right? The downside to waiting until April 14 to start filling out your paperwork is that you have less time to carefully review it and check for any deductions or tax credits you might have missed. Most importantly, you delay any potential refund.
"You don't even have to give the IRS a reason; you can get an extension just by asking for it," explains Barbara Weltman, an attorney and author of J.K. Lasser's 1001 Deductions and Tax Breaks 2011. The one catch is that if you owe any money, you could be subject to a late payment penalty. So if you think you've underpaid your taxes throughout the year, try to finish up your paperwork on time. This Kind Of Couple Fights Most About Money
2. Forgetting about the marriage penalty. Newlyweds often find it shocking to discover that they owe the government more money after tying the knot. The marriage penalty crops up most often for couples who both earn similar, high salaries. In 2010, husbands and wives earning more than $68,650 each in taxable income were at risk for paying more post-nuptials. (Of course, if your situation is the reverse, with one person bringing in most of the cash, then you're in luck—you're probably in for a tax break.) The only way to outwit this challenge is to prepare for it by socking extra money away throughout the year so you're not shocked by your bill on tax day.
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