Evaluating your finances with your spouse really needs to happen every 3 months if not more frequently. Many couples wait until March or April when the have to file their taxes which at that point is usually too late since the expenses are already paid and the income is already earned. In case you’re wondering what to review, we have provided a list of 5 focus areas to discuss with your spouse.
1. Review Overall Budget – Are you over or under – and in what areas are you over or under?
2. Investments/Retirement – How are your investments doing? Any significant changes to investments or tax laws? An example would be converting a traditional IRA to a Roth IRA which began in 2010.
3. Deductions/Credits – Do you have expenses that can be claimed as a tax deduction or tax credit? If so, do you need to spend a certain amount to claim the full benefit of the deduction/credit? For instance, to claim medical expenses as an itemized deduction, the total expenses for the year must exceed 7.5% of adjusted gross income (AGI).
4. Estimated Taxes – Is one spouse self employed and/or do they have a lot of investment income each year – in which they would need to pay estimate taxes each qtr? If so, that spouse wants to look at expected income for the year and if there are changes to the prior qtr. You want to pay as close to the right amount as possible in estimated taxes each qtr.
Now, if you are employed and you get withholding tax taken out of your paycheck – you don’t really need to worry about estimated taxes unless you have a lot of investment income or other types of income that aren’t taxed during the yr.
5. Financial Goals – Have your financial goals changed because you want to buy a house/car, have a child, go back to school etc.? If so, how are you going to make changes to your financial profile and what impact do any of these changes have on your taxes?
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