Money Monday: Answering Some Common Questions Ahead Tax Season

It's Money Monday and we are just one week away from tax filing season.

Individual Tax Returns can be filed starting January 29th through April 15th. Paul Hood with Hood CPAs joined us on News On 6 at 4 to talk about some of the common financial questions that we get this time of year.

Jonathan Cooper: Paul, good to see you. This is your Super Bowl, huh?

Hood: Yeah. Is it (laughs) It's a love-hate relationship. It's harvest season for sure.

Cooper: So for those at home, how do they know if they need to file more than just a standard 10-40?

Hood: So if it, really most people can file a standard 1040 If you don't have a rental property, or you don't have a business on the side, those kinds of things. And then you can generally file the regular 10-40 They used to have what people called the long form of the short form. And that really meant if you itemized or not, but it's really basically the same form.

Cooper: Better than in the old days today, you can just use a computer.

Hood: Yeah. Oh, yeah.

Cooper: All right, let's talk about married couples. Is it better to file jointly or separately?

Hood: So 95% of the time, there's a penalty for filing separately. It's better to file joint. The reason you would file separately though, is sometimes if you've got a premium tax credit for the health care, Obamacare, and you have to pay some of that back. Sometimes it's better to file separately because it's only based on one person's income. Or if you're married to somebody who there's a rule in with the IRS says you're jointly and severally liable, meaning if two people file together, the IRS can collect 100% tax from either one. So if you've got a spouse that you're not sure they're filing their taxes, right or going to owe money, you can you might want to file separately and

Cooper: You'll want to talk to your spouse privately about

Hood: That's right.

Cooper: And then finally, we have one more question here. When should you take more than the standard deduction?

Hood: So I mean, it's a simple question is if you add up your mortgage interest, charities, property taxes, state income taxes, and they come up more than the standard deduction, you should take it.

Now, sometimes we have to look sometimes it's better to elect to take less than the standard deduction. And that's if the state allows you certain deductions because the state has is a piggyback most states are piggyback states. And if we can come up with more deductions for the state, their standard deduction versus the impact on your federal sometimes it's better to elect to actually take less.