Posted on Friday, March 26th, 2021, 9:49 am
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Congratulations on the official start of a new chapter in your life. We are sure that you and your partner are ready to embark on an exciting journey of togetherness and happiness.
They are now together in the ups and downs of life. You have to make new precautions and compromises. Their commitment extends beyond camaraderie to finances.
In this new phase of your life, there will inevitably be financial planning decisions.
Would that also affect the way you deal with taxes? Let's see what factors affect your taxes that happily follow you.
1. Submit your taxes using the correct form
As a bachelor, you'll need to file your taxes and claim some basic deductions under Form 1040A or 1040EZ. However, these forms do not contain any individual deductions.
Now that you are married, you have the option to claim deductions for medical expenses, mortgage interest and many other miscellaneous expenses. According to the federal income tax law, these deductions are only permitted if they are listed individually. Because of this, you'll need to submit your return on Form 1040 instead. Make sure you get the correct form for filing your taxes.
2. Notify the tax office of the name change
Many couples decide that one or both partners change their name after marriage. This is entirely your personal choice and the law does not treat a couple differently.
However, it is important that you and your spouse file your income tax return using the correct name and identification number listed on the IRS office records. If you have decided to change the name, please have the change registered and updated with the Social Security Authority at the earliest. You will receive an updated social security card that will officially register the change.
3. Notify of change of address
Obviously, either you or your spouse or both partners would move to a new place of residence after marriage. In the event of a change of address, you must notify the IRS in good time. This is important to facilitate the IRS office's correspondence regarding your taxes. If your address is incorrect, your tax refund check must be returned as undeliverable.
4. Take into account previous debts
If you or your spouse have a history of charges such as child support payments, loan repayments, or tax liabilities, it is important to consider the position carefully before filing taxes. You don't want one spouse to bear the penalty for another partner's previous contributions.
In order to protect the interests of the non-liable partner, you can submit your return separately. If you prefer to file the income tax return together, the other partner should submit an injured spouse referral form.
5. Deductions are permitted for joint returns
If you file tax returns together as a couple, you can take advantage of standard deductions. This is critical to smart tax planning as the couple can collect deductions even if one of the spouses is not earning. The spouse without income is entitled to an individual pension account and is entitled to benefits that are only available to married couples.
In addition, employers typically disclose benefits for married couples and employees with family members, most of which can be claimed as deductions.
6. Risks of Shared Returns
Submitting a joint return after marriage is also associated with a small baggage. Filing taxes is the joint responsibility of the spouses. The couple are jointly liable for errors or incorrect information when submitting returns. Liability also extends if you separate or get divorced.
7. Consider making separate returns
Filing income tax returns separately may be a better option for some couples. You need to consider the pros and cons of submitting together and make a decision.
We've already discussed a few scenarios where filing together can prove difficult for the couple. Joint filing makes more sense if you have significant medical bills or business transaction costs.
Some states, such as Arizona, California, and New Mexico, have some complex tax regulations for matrimonial and community real estate. Seek advice from a tax attorney to understand which income tax filing option makes more sense for your position under the laws in your state.
8. Probate Protection Acts for Married Couples
The law protects the rights of the surviving spouse in the event of the death of their partner. As such, the deceased person's estate is inherited by the surviving partner with no estate tax to be paid. These laws should be considered when planning your tax and investment decisions.
9. Buy your new home
When you as a married couple buy a new home with your combined income, the property is shared. And also the tax-deductible mortgage interest. At the time of the sale of the house property, the tax profit can also be included from your joint income.
10. Dependent child tax credits
The law allows a tax credit for each dependent child. The child can come from a previous relationship or the biological or adopted child of the couple.
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