No matter when you tied the knot last year, if you were legally married by December 31st at 11:59pm then according to the IRS, you were married all year! And you can reap the tax benefits that come with your new married status!
The big question – should you file jointly or separately with your new spouse?
The marriage tax penalty that you might have heard of is mostly a myth and only affects a small percentage of taxpayers. Generally, filing jointly is the way to go for most couples because of the massive benefits for a household.
Check your deductions. A joint return combines the income and deductions of both spouses regardless of the amount each one makes individually. And many of the tax benefits of marriage don't apply if you file separately! Your tax preparer can give you a comparison showing how filing jointly or separately would affect you, but to give you an idea, here are some of the deductions that are not allowed if you file separately:
· The education credits or the deduction for student loan interest
· The earned income credit
· The credit for child and dependent care
· The child tax credit is reduced if income is over $55,000
If that wasn't enough to scare you off, generally, your tax rate will also be higher if you file separately!
Check your paperwork. Hiring a professional will not only give you a peace of mind, but they will always have the most up-to-date information on tax laws and know what changes the IRS has made in the past year. Keep all your paperwork, forms, financial information, pay stubs, or anything that relates to income or deductions to give to your accountant. Even if you don't think it's necessary, keep it anyway! You never know if there is a deduction or not.
Check your withholding. You may want to check the amount that your employers are withholding for the two of you with an updated Form W-4. The IRS has a withholding calculator you can use if you wanted to fine tune your withholding. If you prefer to have the highest amount withheld during the year, you will probably want to check the ‘Married, but withhold at higher Single rate’ option on the new Form W-4.
Check your legal (as of today) name. Haven't had time to change your last name yet? Just because you are married doesn't mean you have to have the same last name. The IRS only requires that the name on your return matches your name in the Social Security Database. (And if you are taking on your partner's surname, check how to change your last name here on Tidewater and Tulle!)
Happy Tax Season!
- Ryan Gerres
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