Friday, March 06, 2009

Making taxes work for me

I did Trillian's taxes a few weeks ago and we're already enjoying the benefits of having our rebate direct-deposited. I finally finished my taxes tonight, having put them off since I was either going to break even or owe money.

Now if we were able to file 'married, filing jointly,' we would probably be seeing lower taxes overall. But in the meantime, we've learned how to make the system work for us as much as possible.

Last year, when Trillian owed taxes in Canada, therefore zeroing out her liability in the US, I took Scooter as a deduction here in the States, which made sure I owed nothing on my fellowship money (which is taxable here). Since my fellowship is untaxed in Canada, leaving me with no effective income, Trillian took all the child credits on her Canadian taxes.

This year, our taxes were a bit simplified. Trillian earned all of her money in the US, so there was only the one form. We shifted all of the credits and deductions to her. This included the hefty amount of mortgage interest we paid. Since our mortgage is "joint tenancy with right of survivorship," without a specified proportion of interest in the property, we are allowed to allocate the tax write-off as we desire. Throw in the child credit and head of household status, and she made out pretty well.

As it turns out, I don't even have to file a Canadian return. All of the money I made was again tax-exempt fellowship, and I didn't have any need this year to transfer education credit to Trillian's return. Easiest tax return ever.

Then I worked through my US federal tax return, knowing I would owe some money since I earned more in fellowship this year and the exchange rate wasn't as friendly to me. But it worked out to a reasonable $69.

Which I basically recouped via my state taxes. Turns out that my state has what amounts to a "poor person" tax credit. So just like that, $65 rebate. The irony is that if Trillian and I could file jointly, there's no way I'd qualify.

Maybe I'd feel a little differently about that money if our state hadn't just decided not to recognize our relationship, which I believe would have included the ability to file taxes jointly. Maybe I should spend that $65 on something that would make the Catholic Church (they were the main force behind the legislation's defeat) absolutely quail. Suggestions?

1 comment:

Team Serrins Springfield said...

I'll send you an e-mail today. I think you may be missing a big possibility on your taxes.