Keep these points in mind while you’re preparing your 2001 return:
Don’t forget filing requirements for household employees. Employers of household employees must withhold and pay Social Security taxes annually if they paid a domestic employee $1,300 or more a year. Federal employment taxes for household employees are reported on your individual income tax return (Form 1040, Schedule H). Employers pay these taxes for domestic employees by increasing their own wage withholding or quarterly estimated tax payments.
Calculate your tax liability as if filing jointly and separately. In certain situations, filing separately may save money for a married couple. If you or your spouse is in a lower tax bracket or if one of you has large itemized deductions, filing separately may lower your total taxes. Filing separately may also lower the phase-out of itemized deductions and personal exemptions, which are based on adjusted gross income.
Don’t overlook minimum distributions at age 70 1/2 and risk racking up a 50 percent penalty. Minimum distributions from qualified retirement plans and IRAs must begin by April 1 of the year after you reach age 70 1/2. In most cases the amount of the minimum distribution is calculated based on an IRS table. If the amount distributed is less than the minimum required amount, an excise tax equal to 50 percent of the amount of the shortfall is imposed.