Monday, July 1, 2013

Love is in the air...

Ah...Summer love, that time of year when young (or not so young) couples may decide to get married.  It is a joyous event and a time to celebrate the joining of two families into one new family.  The newlyweds then proceed to go on a honeymoon to celebrate their nuptials and then return to go back to work as the new Mr. and Mrs.

But you may be asking why is a tax professional writing about the topic of marriage and that answer is simply, almost every decision we make has an impact on your tax calcuations.  Marriage is no different and the IRS even sent out a recent reminder of things to review when you have gotten married like:

  • It’s important that the names and Social Security numbers that you put on your tax return match your Social Security Administration records. If you’ve changed your name, report the change to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get this form on their website at SSA.gov, by calling 800-772-1213 or by visiting your local SSA office.
  • If your address has changed, file Form 8822, Change of Address to notify the IRS. You should also notify the U.S. Postal Service if your address has changed. You can ask to have your mail forwarded online at USPS.com or report the change at your local post office.
  • If you work, report your name or address change to your employer. This will help to ensure that you receive your Form W-2, Wage and Tax Statement, after the end of the year.
  • If you and your spouse both work, you should check the amount of federal income tax withheld from your pay. Your combined incomes may move you into a higher tax bracket. You can make changes to your withholding by submitting a new form W-4 to your employer.
  • If you didn’t qualify to itemize deductions before you were married, that may have changed. You and your spouse may save money by itemizing rather than taking the standard deduction on your tax return.
  • If you are married as of Dec. 31, that’s your marital status for the entire year for tax purposes. You and your spouse usually may choose to file your federal income tax return either jointly or separately in any given year. You may want to figure the tax both ways to determine which filing status results in the lowest tax. In most cases, it’s beneficial to file jointly.  Also if you live in a Community Property state, different rules may apply to allocation of income between the spouses so please consult with a professional to determine if this impacts you.
I recommend that you consult with your advisor to see if and how you may be impacted and do that while you can still make changes to avoid a big surprise when you go to file your tax returns next April.
 

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