More articles from Uncategorized
Getting married? Get ready to make some changes on your tax return. Most married couples get a marriage bonus: paying less income tax than they would if each partner were single. Here’s what else is in store for newlyweds.
First of all, your filing status changes. Although that seems obvious enough, what does that really mean? For one, it determines amounts for exemptions, deductions and credits when you file your tax return.
Regardless of whether you got married this summer or December 31, for filing purposes you are considered married for the full tax year. Generally, you have one of two filing status options: Married Filing Jointly (MFJ) or Married Filing Separately (MFS). Most married couples file jointly.
Generally speaking, more tax benefits are available to those claiming the married filing jointly status.
Joint filing typically is a good idea if you both work and one makes considerably more than the other. Combining incomes could bring the higher earnings into a lower tax bracket. Overall, it keeps things simpler: file only one Form 1040.
However, there are instances when filing separately can lower your overall tax liability. For example, if you or your spouse has large medical bills and can meet the deduction threshold by considering only his or her income. Starting with the year 2013, the 7.5% threshold increases to 10% of your adjust gross income.
If you and your spouse do decide to file “married filing separately,” as a general rule, both returns have to claim either the standard deduction or itemize your deductions.
Filing married jointly are allowed a standard deduction of $12,200 for the tax year 2013. Many couples find it is more advantageous to itemize their deductions when married. For instance, if you own a home, the interest on your mortgage payments is tax deductible. If that amount exceeds the standard deduction, it might be worth itemizing your deductions.
Once married, the amount of home-sale profit (capital gains) can be tax free doubles from $250,000 to $500,000 — assuming you own and live in the house for at least two of the five years before the sale. If either of you sold a house, assuming you meet the two-out-of-five year test for the house sold, the $250,000 limit applies as if the seller was single. However, if you both sold your houses, then you can both claim up to the $250,000 amount for each.
If you took your spouse’s last name — or if you hyphenated your last names, you will need to notify the Social Security Administration. When you file your taxes your name should match what the Social Security Administration has on record, otherwise delays in processing tax refunds could result.
If you change your name, simply file a Form SS-5, Application for a Social Security Card, at your local SSA office, or by mail and provide a recently issued document as proof of your legal name change.
Notify the IRS and the U.S. Postal System if you moved. Generally, if you notify the U.S. Postal System, they will forward any IRS correspondence or refunds, but taking an extra minute to file Form 8822, Change of Address with the IRS is also recommended. You may download Form 8822 from IRS.gov or order it by calling 800-TAX-FORM (800-829-3676).
Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
If both you and your spouse work, your combined income may place you in a different tax bracket. Less taxes are withheld from your pay when claiming an additional and/or changing withholding to the “married” rate on your Form W-4. In order to avoid the surprise of owing too much in taxes as a result, using Taxbrain’s free W-4 calculator in combination with the refund calculator will let you know whether one or both of you should change your withholding amount.
With a free Taxbrain account, find out how easy it is to do your own taxes. Get all the free technical support you need to prepare your own taxes. Learn more, visit Taxbrain.com today.