Single, never married is the easiest. With married you need to be married at the end of the year. If a divorce is pending, tax planning may need to be done to make it final by year end or defer it to the following year.
Unmarried head of household is more problematic; there are number of questions to be answered to determine if you qualify. If so, you get a lower tax rate.
Dependents – You are allowed an exemption for each qualifying dependent. This is easy for your children. But what about parents, step children, foster children, nieces, nephews, and that kid who won’t go home? There are complex rules which may qualify these individuals as dependents.
Tip: Keep records of what you pay for each person in your household that you support. Ask your tax professional about these people to see if they qualify as dependents.
3. Charitable deductions – If you donate money to a qualifying charity, you get to deduct this amount if you itemize your deductions. You can deduct the amount up to 50% of your adjusted gross income. If you are above this limitation the excess contribution carries over.
Stuff and other – If you donate household, clothing, and other things to Goodwill or a similar charity, you get a deduction for the value. If you travel for charity, you get to deduct mileage and any out of pocket costs. Many people lose these two deductions because they don’t keep track.
Donating appreciated stock – This is a winner. You get to deduct the value of the stock as a charitable deduction and you don’t have to pay tax on the gain of the stock.
Tip: Track what you give and get letters acknowledging your contributions. Keep track of mileage for charity and give away your excess stuff once a year.