Some of the best things about growing up include finding true romantic love, mastering your profession, and picking your own bedtime. Of course, there’s a flipside to these perks. Adulting also includes paying the bills, folding your laundry, and arguably the worst of all—doing your taxes.
It can feel like you’re paying taxes with every financial transaction. This is because, well, you are. When you buy groceries, you pay taxes. When you book an Airbnb, you pay taxes. When you order delivery on Grubhub, you pay taxes. If you own real estate, then at some point during the course of a year you’ll be asked to pay taxes based on the value of your property.
Those taxes generally go to help fund resources your local government needs. All governments need money, and the federal government is certainly no exception. It needs a lot of money, which is why it taxes your income.
The deadline to file your income tax return is April 15 of every year. Although an extension was granted for 2020, due to the financial hardships and office closures imposed by the Covid-19 health crisis, Uncle Sam is back to business as usual this year. You should have received all of the tax documents you need to file by the end of January, and now is the perfect time to start preparing to file.
For those new to adulting (welcome!), income tax is a tax imposed on the money you make. Most people receive income from their jobs in the form of wages or salary, but income is also considered the money you receive from:
This isn’t an exhaustive list, but you get the idea. As you get older, your taxes can become more complicated because you receive income from a variety of sources. Add a new marriage and dual incomes to that equation and you might find you’re in need of professional assistance. Moving from one state to another, getting married or divorced, having children, or starting a new business are all circumstances that can complication your taxes.
What’s the Best Way to do Your Taxes?
Sometimes filing your tax return is as simple as reporting income from the two W-2 forms you and your spouse receive, and BAM you’re done. Some couples, though, end up receiving a pile of various 1099 forms and a stack of W-2 forms from a plethora a jobs worked the previous year. If this sounds more like you, then you likely have expenses related to your work that could reduce your overall tax bill.
When it comes time to calculate the taxes you owe or the refund you’re owed, there are three primary ways to get the job done. You could fill out the paper forms using your own mathematical prowess, you could use software that does the math and fills out the forms, or you could hire a flesh and blood tax professional to do the job.
When your taxes are even a little bit complicated, it’s a good idea to seek professional help. Many of the online software programs, like Turbotax provide access to tax experts through chat for a fee. This might be enough to answer all of your questions but if you’re going to have more than a few questions here and there, it’s best to go with flesh and blood, in real life, human help.
Hiring The Best Tax Professional
Sure, marrying the right person is great and all, but have you ever tried to find a tax preparer who’s a good match for you and your spouse’s tax needs? Ok, so maybe it’s not quite as important as marrying for true love, but those who find a great tax professional usually stick with them for the long haul.
When you’re starting your search for the tax person of your dreams, you’ll want to find someone who’s competent, ethical, and affordable. Unfortunately, crystal balls still aren’t a thing but those professionals who hold the following credentials, along with a Preparer Tax Identification Number (aka “PTIN”), are a good place to start:
- Certified Public Accountant
- Licensed Attorney
- Enrolled Agents
You can also check out the IRS Directory to find individuals who are qualified to prepare your taxes. Through this directory you can filter through individuals with various credentials within your zip code area. This directory is also useful if you’ve already found a professional, but you want to confirm that they have the credentials they say they do.
When choosing a professional to prepare your taxes, it’s also important that they be approved to represent you in the case of audits and appeals or payments and collections. The IRS doesn’t let just anyone speak on your behalf so be sure they have that PTIN before you hire them.
You could also ask friends and family if they have a trusted tax professional that they could recommend. We often overlook word of mouth recommendations in this digital age of Yelp and Google reviews, but sometimes personal recommendations often offer the best insight.
Now That You’re Married, How Should You File Your Taxes?
Before you got married, you probably filed your taxes as a single person. Easy peasy. Now that you’re married, though, there are two options available to you. Your tax professional will help you determine which option is best for you, but here is a brief overview.
Most married couples file a joint tax return. The “married filing jointly” status usually provides the most tax benefits as it allows couples with a higher household income to still be able to qualify for various deductions.
Similarly, those married couples who file jointly qualify for more tax credits, such as the child and dependent care tax credit and the earned income tax credit, to name a few. Spouses with unequal incomes also benefit from filing jointly because a lower income can offset a higher income.
Just because you are married does not mean you have to file jointly, though. You can choose to still file your returns separately, but this option rarely results in a tax benefit. That said, there are circumstances when it might make sense. For example, you may want to file separately if you want to keep your assets separate, one spouse is a non-resident alien, or you feel your spouse’s income was obtained *ahem* illegally.
If you still aren’t sure how you should file after researching and speaking with a tax professional, you could always run the numbers both ways to determine the best option for you. You should be aware that that is a time-consuming process and if you’ve asked a tax professional to do it, you’ll have to pay for the time they spend doing it.
Prenups and Taxes
Can you really include a clause in your prenup about how you will file your taxes? Kind of! HelloPrenup offers an optional clause, that states that just because you and your future spouse are to file taxes together, such filing should not impact what is considered to be separate or marital property. To be more specific, this clause states that any joint filing of tax returns, and/or the combining of your separate incomes and deductions, will in no way be deemed a waiver of, or abandonment of any parts of your prenuptial agreement, and similarly, no inferences about what is or is not “separate property” or “Marital Property” status will be drawn due to the tax filing.
Do You Really ALWAYS Have to Pay Taxes?
So, after all of this information, if you’re wondering whether or not you really have to file your tax return, the answer is yes. We’re adulting, remember? It is especially important to file your tax return if you think you’re going to have a tough time paying what you owe. You should go ahead and file, pay what you can, and then set up an extension or a payment plan for the rest.
If you don’t pay the taxes you owe for the year, the IRS will begin to ding you with penalties and interest. The penalty is equal to 5% of the unpaid balance per month, up to 25%. Interest on the debt owed can change quarterly and be tricky to figure out without help from a professional.
After you file, if you need extra time to get your funds together, the IRS can provide a short-term extension or a hardship extension, depending on your circumstances. There is interest associated with these extensions as well, but it won’t cost you as much as the interest and penalties you’ll be hit with if you simply don’t file your tax return at all.
If you don’t file your taxes, and the IRS actually owes you money, then the good news is that you won’t be hit with any penalties. You may be missing out on a refund though, that could go towards bills or an interest-bearing savings account!
Adulting Gets a Bad Rap
The term “Adulting” is thrown around a lot these days. When you hear the word, it’s usually veiled in sarcasm or cynicism, but it doesn’t deserve the bad rap it gets. Adulting means doing the hard, boring, or responsible thing now so that you don’t have to worry about even messier situations down the road.
When you start your life with your partner, you can look forward to all of the joys that come with building a life together. You should also know that you will experience the frustrations that come from managing two lives as one, but these difficulties can serve to build a stronger bond between you and your partner.
While adulting as a married couple means having a prenup, doing your taxes, and paying your bills on time, it also means celebrating each other’s successes, growing as a team, and yes, staying up as late as you want.
Julia Rodgers is HelloPrenup’s CEO and Co-Founder. She is a Massachusetts family law attorney and true believer in the value of prenuptial agreements. HelloPrenup was created with the goal of automating the prenup process, making it more collaborative, time efficient and cost effective. Julia believes that a healthy marriage is one in which couples can openly communicate about finances and life goals. You can read more about us here Questions? Reach out to Julia directly at [email protected].