Of Marriage and Taxes
In a touching scene from Frozen, Olaf tells Anna that “Some people are worth melting for.” The many couples who choose to get married in the summer must agree with this sentiment as temperatures soar across eastern NC. With so many summer weddings going on, we thought this would be a good time to look at some tax issues related to marriage:
First comes love, then comes a new filing status! Every year we have newlyweds ask if they should still file as single, especially if they didn’t get married until the second half of the year. Filing status is determined by marital status on December 31, so if you’re legally married on New Year’s Eve, you will need to file either as Married Filing Jointly (MFJ) or Married Filing Separately (MFS).
The majority of married couples will benefit from filing jointly, but there are some circumstances – from disparate incomes to legal issues - that make MFS the better choice. Taxpayers should always figure their taxes both ways to make sure they’re picking the most advantageous filing status. Of course, this is something we automatically do for our married clients.
All you need is love … and the correct amount of withholding. Getting married is definitely a good reason to check the amount of federal and state taxes being withheld from your paycheck. With a new filing status and possibly a new tax bracket, your current withholding may not be correct. You can use the withholding calculator on the IRS website to check. If your results using the calculator indicate you’ll owe additional taxes when you file, you can change your withholding to make up for the projected deficit. Some employers allow workers to do this for themselves online while others will require a new W-4 to be submitted to the HR department, but all will allow changes to withholding during the year.
What’s in a name? Well, a rose by any other name can’t file a tax return! Finally, if either spouse is changing their name, the Social Security Administration needs to be notified. Tax returns must be filed in the name that appears on the Social Security records. The IRS computers match up the names and Social Security numbers on tax returns with those on the Social Security master list; if there’s a mismatch, the return gets rejected. It doesn’t matter what your friends call you or what the DMV put on your new driver’s license; if you haven’t changed your name with Social Security, you haven’t changed your name for tax matters.
If you are a newlywed, Down South offers our congratulations and best wishes for a lifetime of happiness! Please call on us if we can be of assistance with any of your tax needs. Been happily married for awhile? That also deserves a congratulations, and obviously we’ll be glad to assist with your tax needs as well!