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P. 106
Furthermore, it is clear that one looks your taxes and schedule the wedding 2) Itemizing: As usual, you can
at the student’s status as of January 1 accordingly. deduct charity, mortgage interest, real
of the year. Therefore, if A graduated estate taxes, and state income taxes.
with a bachelor’s in June 2016 and 2) Obviously, the lower your income, Here in Maryland, itemizing deduc-
immediately starts a masters program, the better. Pensions, daycare, work tions can reduce your tax bite signifi-
the cost of the master’s program would expenses, and health expenses can be cantly. If you are close to the itemizing
count, since, as of Jan 1, 2016, he was paid for with pretax dollars. limit, up your charity to get over the
still an undergraduate. Bear in mind limit.
that this money can be used for school 3) Sign up for your company’s pen-
supplies, including a laptop. Imagine sion plan. Not participating is a big 3) Remember that a charity dona-
buying a top-of-the-line $2,000 Mac mistake, especially if the company tion of $250 or more needs a receipt.
book and getting it for free due to this matches your contribution. You save Also, if you drive as a volunteer (for
credit. Wow! taxes now and prepare for old age NWCP or Bikur Cholim, etc.) you can
down the road. deduct for each mile driven.
There is another college credit
called the Lifetime Learning credit, Deductions 4) Those who cannot itemize
which saves you 20% of college tuition 1) Claiming older children (over 18) as (because the total comes to less than
of $10,000 per family. It does not dependents might depend on their the standard deduction) can work a
include books and supplies. For this income. Keep an eye on their earnings. strategy called “bunching.” Essentially,
one, you do not need to be half-time If it goes over $4,000 they would have you give all your charity and real estate
nor is it limited to four years. to be students to be claimed. This can taxes every other year. It sounds com-
get complex. Warning: I have seen col- plicated, but it’s not and it can mean
Planning Ahead lege kids walk into storefront tax pre- serious savings every two years.
The tax fundamentals remain the parers and file taxes without telling
same. Here are some general pointers: their parents: “Look, Ma – no hands!” 5) If you sold stocks this year, you
The IRS then rejects the parents’ tax need to know the “cost.” This means
1) Plan ahead. For example, if you return when they file claiming that let’s-hope-you-have records. If a stock
are married on the last day of the year, same child. Folks, no family tax moves became worthless, the entire cost is
you are considered married for tax without getting everybody on the same deductible.
purposes. Check how marriage effects page!
6) Another tip: Clean up the house
and donate your unwanted stuff to
102 u www.wherewhatwhen.com u
at the student’s status as of January 1 accordingly. deduct charity, mortgage interest, real
of the year. Therefore, if A graduated estate taxes, and state income taxes.
with a bachelor’s in June 2016 and 2) Obviously, the lower your income, Here in Maryland, itemizing deduc-
immediately starts a masters program, the better. Pensions, daycare, work tions can reduce your tax bite signifi-
the cost of the master’s program would expenses, and health expenses can be cantly. If you are close to the itemizing
count, since, as of Jan 1, 2016, he was paid for with pretax dollars. limit, up your charity to get over the
still an undergraduate. Bear in mind limit.
that this money can be used for school 3) Sign up for your company’s pen-
supplies, including a laptop. Imagine sion plan. Not participating is a big 3) Remember that a charity dona-
buying a top-of-the-line $2,000 Mac mistake, especially if the company tion of $250 or more needs a receipt.
book and getting it for free due to this matches your contribution. You save Also, if you drive as a volunteer (for
credit. Wow! taxes now and prepare for old age NWCP or Bikur Cholim, etc.) you can
down the road. deduct for each mile driven.
There is another college credit
called the Lifetime Learning credit, Deductions 4) Those who cannot itemize
which saves you 20% of college tuition 1) Claiming older children (over 18) as (because the total comes to less than
of $10,000 per family. It does not dependents might depend on their the standard deduction) can work a
include books and supplies. For this income. Keep an eye on their earnings. strategy called “bunching.” Essentially,
one, you do not need to be half-time If it goes over $4,000 they would have you give all your charity and real estate
nor is it limited to four years. to be students to be claimed. This can taxes every other year. It sounds com-
get complex. Warning: I have seen col- plicated, but it’s not and it can mean
Planning Ahead lege kids walk into storefront tax pre- serious savings every two years.
The tax fundamentals remain the parers and file taxes without telling
same. Here are some general pointers: their parents: “Look, Ma – no hands!” 5) If you sold stocks this year, you
The IRS then rejects the parents’ tax need to know the “cost.” This means
1) Plan ahead. For example, if you return when they file claiming that let’s-hope-you-have records. If a stock
are married on the last day of the year, same child. Folks, no family tax moves became worthless, the entire cost is
you are considered married for tax without getting everybody on the same deductible.
purposes. Check how marriage effects page!
6) Another tip: Clean up the house
and donate your unwanted stuff to
102 u www.wherewhatwhen.com u
