Just married? Have you thought about how it will impact your taxes? It might be the last thing on your mind when tying the knot, but marriage can have an enormous impact on your tax situation. A taxpayer's marital status, as of December 31, affects their tax filing options for the year. Here are some critical things newly married couples need to know.
Name Change
If you change your legal name after getting married, you must inform the Social Security Administration (SSA). Otherwise, if the name on your tax return does not match the name the SSA has on file, it will likely cause problems at the IRS when your return is processed. If you are expecting a tax refund, it might be delayed until the discrepancy is resolved.
You can change your name by filling out Form SS-5. Take the completed form to your local SSA office along with documents proving your identity and an original or certified copy of your marriage certificate. If you are up against the tax filing deadline and have not yet changed your name with the SSA, you can still file a joint return with your spouse. Just be sure to use the name shown on your Social Security card.
Address Change
Marriage often involves combining two households into one. If there is a change of address, the IRS and U.S. Postal Service needs to know. To do that, people should complete and send the IRS Form 8822, Change of Address. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or visiting their local post office.
If you are selling homes owned by one or both spouses, the amount of tax-free profit you can receive from selling your home doubles from $250,000 to $500,000. Here's how that works.
To avoid paying taxes on up to $250,000 profit from selling a home, one spouse must have lived in and owned the house for at least two of the last five years.
To qualify for the $500,000 tax-free gain, both spouses must have lived in the home for at least two of the last five years, and at least one spouse must have owned it for at least two of the past five years.
Withholding
Once back from the honeymoon, couples may need to adjust the withholding from their paychecks. Newly married couples must give their employers a new Form W-4, Employee's Withholding Allowance. The new form helps determine how much federal income tax your employer should withhold from your paychecks based on your filing status, other income, and credits and deductions. If both spouses work, they may move into a higher tax bracket or be affected by the additional Medicare tax. They can use the Tax Withholding Estimator on IRS.gov to help complete a new Form W-4.
Filing Status
Married people can file their federal income taxes as either married filing jointly or married filing separately. While filing jointly is usually more beneficial, it is best to figure out which method makes the most sense. Using the married filing separately status rarely works to lower a couple's tax bill. And remember, if you are legally married as of December 31 of the tax year, the IRS considers you to be married for the year.
Scams
All taxpayers should be aware of and avoid tax scams. The IRS will never initiate contact using email, phone calls, social media, or text messages. The first contact generally comes in the mail. Those wondering if they owe money to the IRS view their tax account information on IRS.gov.
Still wondering how getting married will impact your tax return. Let an expert do your taxes for you. Contact us to see how we can best support you.