Managing Taxes for the Newly Married
Transitioning from being single to being married has a lot of changes that come with it. One change that often confuses couples is tax preparation as a married couple. For 2018 tax purposes, you will be eligible to file as a married couple as long as you were married before December 31st.
Choosing Your Filing Status
Choosing to file jointly or separately is one question that every couple will face. At first glance, taxes for married couples can seem very confusing. However, with the right understanding of how each status benefits you, it becomes very simple!
Married Filing Jointly
When couples file jointly, there are several tax benefits that are offered.
Firstly, filing jointly can make couples eligible for additional standard deductions and tax credits such as the Earned Income Tax Credit and the Child and Dependent Care Tax Credit. Combining incomes may increase itemized deductions.
Another reason to file jointly is that typically larger refunds are given to couples. This occurs because the income threshold is much higher for a couple filing jointly. Since this will put a couple into a lower income bracket, the couple may be able to claim more deductions.
Married Filing Separately
In certain cases, it may not make sense to file jointly. In these instances filing separate tax returns can be a good option. A few reasons filing separately may be best for you are:
- If you need to file a separate return. If one of you has lived in a different state for part of the year you may have to file separate state tax returns.
- You paid more than half of the cost of living for your dependents. If you have paid a greater portion for your dependent’s living expenses, you may want to file separately to maximize returns.
- Either you or your spouse had large medical bills. If one of you had large medical bills you will be able to deduct more medical expenses based on individual income.
- You or your spouse traveled for business. When one individual travels frequently for business, it can increase the miscellaneous deduction.
- When you’re going through a divorce. Filing jointly while going through a divorce can lead to unforeseen tax liability. It is beneficial to file separately so as to avoid footing the bill for your partner’s tax debts.
In these cases choosing to file separately may make the most sense for you and your spouse. If you’re unsure of which method to choose, it can help to try both ways. By preparing both types of tax returns you can identify how to get the highest tax refund.
Filing Tax Returns for International Partners
If your spouse is not a U.S Citizen, filing your tax return will look a little different than usual. You have two options for how to approach your spouse’s filing status.
The first option is to file as though your spouse is a resident alien. This is the simplest way to handle international partners.
Filing with a resident alien spouse will allow you to file a joint tax return. The IRS will give you an increased deduction because of your spouse’s foreign status. However, any income outside of the U.S will be taxed at U.S tax rates as well.
The second option is to file with your spouse listed as a nonresident alien. In this situation, you won’t be able to file jointly. Your spouse will have to file separately, although you may be able to claim him or her as a dependent on your return.
If you claim your spouse as a dependent on your return, your spouse must meet several criteria. Your spouse must have no U.S income and may not be listed as a dependent on anyone else’s return.
How do Civil Unions File Taxes?
Unfortunately, civil unions are currently not allowed to claim a married filing status. Domestic partnerships and other formal relationships are also not allowed to claim this status.
Same-sex couples that have legally been married, however, must file as married. They are only required to do so for states that recognize their marriage.
It’s important to note that same-sex couples may claim an amended tax return for years prior to the new same-sex tax laws being passed. These couples are not required to do so unless they choose to.
Another common question many same-sex couples have regarding their taxes is how to handle dependents. Children of the couple may be claimed on one taxpayer’s return, but not on both. Additionally, same-sex couples may not claim their partners as dependents.
Changing Personal Information after Marriage
When you get married, a lot of information changes. Many couples choose to change their name or relocate to a new address. Both of these changes can impact your tax return.
Name Changes and Your Tax Return
If you choose to change your name after marriage, be careful filing your return. The name on your tax return needs to match the name on your social security card.
You will also need your previous name in order to pull up your old tax information. If you do not have a copy of last years Adjusted Gross Income you may need to request it. You can request last year’s tax information on the IRS website using your maiden name.
If you haven’t changed your name and tax season is approaching, it’s a good idea to wait until after you have filed your return. It takes the SSA up to two weeks to process your name change, and the IRS will take another two weeks to update their systems.
Change of Address on Your Return
Changing your address on your tax return is a very simple process. To do so, simply complete a Change of Address Form and mail it to the IRS. This will help the IRS to update their system to accurately display your personal information on your form.
Failing to notify the IRS of your address change could delay your refund check. It can also cause your check to be sent to the wrong place!
Stay on top of updating the government about personal changes after marriage so as to avoid confusion and delayed returns.
Deaths and Divorces
Certain spousal situations associated with a new marriage may cause further complications in filing your return. In these situations, it can be tricky to know how to file.
When a Previous Spouse Passes Away
If your previous spouse passed away during the last tax year, you are still considered married to your spouse for the entire year. In this case, you can still file either jointly or separately.
If you remarry in the same year, however, things are a little different. You will not be able to file jointly. Instead a representative would separately file on behalf of your deceased spouse.
When you Get a Divorce During a Tax Year
If you are only separated, you will still be able to file using the “married” status. It will be up to you and your spouse to decide whether to file jointly or separately.
If you are divorced, however, you can choose to file either as head of household or as single. If you choose to file as the head of household, you must either be the custodial parent of your children. You can also file as head of household if you paid for most home expenses during the year.
Getting married goes hand-in-hand with a lot of changes, but it doesn’t have to lead to confusing tax filing. Filing your taxes as a married couple can be very simple as long as you take the time to identify how to file properly.