Today we focus on claiming exemptions, dependents and a wide variety of adjustments to income.
First, your exemptions: On your 2016 return, you can take $4,050 off the top for each person you claim as an exemption. That’s generally you, your spouse and any dependents, which usually means your kids. But if you cared for a parent, even one who didn’t live in your home, you may be able to claim an exemption for that person, too.
You’ll need the Social Security numbers of all your dependents. Without those nine digits, the IRS will disallow the claim.
Next, there are some expenses eligible taxpayers can claim directly on the Form 1040 tax return or, to a lesser degree, the 1040A. These are known as adjustments to income or above-the-line deductions and include — to name just a few — certain IRA contributions, student loan interest, alimony payments and moving costs.
Take a few minutes to check out the complete income adjustments list, and note which ones apply to you. That’s it. You’re done for today.
Most taxpayers use the standard deduction rather than bothering with tracking every expense to itemize. If the standard amount works for you, great!
If, however, your tax-deductible costs add up to more than the standard deduction amount, you’ll want to maximize those expenses by itemizing.
These itemized deductions include:
Home-related write-offs, such as mortgage interest and property taxes.
State income taxes.
Go back to the material you collected on day one. Your W-2s will show how much state and local income taxes you paid. Dig out the receipts you got for all your deductible donations. And find that statement from the mortgage company showing your loan interest and property tax payments.
We’re almost done! Today, with fresh eyes, double-check your tax form entries.
Once you’re sure you’ve correctly accounted for all your income, claimed every possible deduction and credit, and entered all that information properly on your return, it’s time to put the finishing touches on your annual tax duties.
Sign it, electronically or by hand, depending on your delivery method. Either way, a John Hancock is a requirement.
If you did your taxes via computer, be sure to save a copy to your hard drive. A printed copy isn’t a bad idea, either. If you filled out your Form 1040 by hand, make yourself a copy of that final form and all attachments.
Then send it on its way, either via the post office or by hitting the “enter” button on your computer keyboard.
That’s it — you’re done! Now, take a well-deserved break. And this time next year, you can again complete your annual tax chores in just seven relatively stress-free days.