Autumn is upon us, and there is no better time for divorcing spouses to start thinking about tax preparation for the year 2014.
Even though we're 7 months away from having to file our taxes, once the clock strikes midnight on December 31, there's not much you can do. What if you didn't withhold enough? Wouldn't you like to know that beforehand?
I highly recommended getting a tax projection done to find out.
What do you need in order to have this projection done?
- Your income for 2014. If you are salaried, you can figure out what your income will be for the rest of the year. If you're on commission, you might have to estimate. Remember that if you're receiving alimony, it's taxable income, and if you're paying alimony, it’s tax-deductible.
- If you’ve signed your divorce decree at any time in 2014, you will be considered divorced for the entire year. When doing your taxes, make sure you have copies of your divorce settlement agreement so that you can list alimony and other items that are relevant.
- Dividends on investments that you hold. You can look at your brokerage statement for September and get a close guess.
- Ask your broker for a YTD estimate on realized capital gains or losses.
- You can project what your mortgage interest is by looking at what you have already paid YTD, and calculating what the last three months will be.
- Estimates of charitable contributions, based on previous years.
- Look at your medical bills, doctors, dentists, hospitals, prescriptions, and other medical items.
- If you purchased a home or refinanced in 2014 make sure you have your closing documents.
- You should know what your real estate tax is by now; and finally;
- It's always a good idea to check with your former spouse to make sure you are both using the same number off of which to base your alimony calculations - and that your other numbers agree, too.
Being proactive in October or November, rather than waiting until April, is a prudent move. Have you done a projection yet? If not, I can help - contact me today.