If you find yourself recently married or in the process of getting married, it's important to consider more than just floral arrangements. Marriage, while a loving union, is also a huge financial change. Making sure you have your taxes in order is a must. Here are 7 things you need to have your to-list after those nuptials are finalized:
1. Notify the Social Security Administration (SSA) If one of you has taken on a new name, report the change to the SSA. File Form SS-5, Application for a Social Security Card.
It is essential that your name and Social Security Number match on your tax return. The IRS will match your information with records provided by the SSA and, if the records don’t match, any electronically filed return will be rejected and any paper filed return will be de- layed until the error is corrected.
Getting married during tax season? It may be best to avoid changing your name. While the SSA can process a name change in about two weeks, the delay in data-sharing between the SSA and the IRS can make any change near the end of the year problematic. In such situations, it may be advisable to file the tax return using your maiden name and change your name with the SSA after the return has been filed.
2. Notify the IRS If You Move The IRS will automatically update your new address upon filing your next tax return, but any notices the IRS sends in the meantime may not get to you. The U.S. Postal Service does not forward certain types of federal and certified IRS mail.
3.Notify the U.S. Postal Service To ensure your mail, including mail from the IRS, is forwarded to your new address, you’ll need to notify the U.S. Postal Service.
Most post offices will not forward refund checks so be sure the IRS has your correct address. Using electronic direct deposit for refunds can prevent them from being delayed due to address mix-ups.
4. Notify Your Employer Report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
5. Notify Financial Institutions Financial institutions with which you do business need to be notified to ensure that any Forms 1099 are sent to the proper address. This would include banks and brokerage firms, as well as employer-sponsored retirement plans.
6. Check Your Withholding If you both work, keep in mind that you and your spouse’s combined income may move you into a higher tax bracket. The IRS Tax Withholding Estimator, available at www.irs.gov, can help you determine whether you need to give your employer(s) a new Form W-4, Employee’s Withholding Certificate. Use the results to fill out and print Form W-4 online and give it to your employer(s).
7. Choose the Best Filing Status Once you are married, you can no longer use the Single filing status on your tax return. Your marital status on December 31 each year determines whether you are considered married for the entire year for tax purposes. Generally, the tax law allows married couples to file their federal income tax returns either jointly or separately in any given year.
Married Filing Jointly. If you are married on the last day of the year and both spouses agree, you can file a joint return. Joint returns include income and deductions for both spouses. If a joint return is filed, both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on the joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other person. For most married couples, filing jointly will result in a lower tax liability. Once a joint return is filed for any tax year, it cannot be amended to file separately.
Married Filing Separately. If you are married you can choose to file separately and report only your own income, credits, and deductions. Many credits and deductions are not allowed on married filing separately forms, which generally results in higher tax liability. A separate return can be amended within three years of the due date to change the filing status and file a joint return.
When does it make sense for a married couple to file separately?
Have questions? Contact us! We can help.
© COPYRIGHT 1993-2020, Warner Tax Group. All rights reserved.
Website by TeeDub Web Designs