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How Marriage Affects Your Taxes

By Edited Nov 13, 2013 0 0

Understanding what you have to do and the options you have when filing your taxes is essential to ensuring that they are filed correctly.

The first thing you should understand, is that no matter when you are married during the year, your marital status on the last day of the year, December 31, is the determining factor for your tax filing options. If this is your situation you have 2 options:

1. File a joint tax return

2. File a married but filing separate status

Most couples who are in this situation opt to file jointly due to the following factors: it is easier and less expensive. When you file jointly you only have to file one 1040 form and not worry about which expenses and income belong on which spouse’s tax returns. However, keep in mind that once you file jointly you can be held responsible for any of your spouse's past due, unpaid or unfiled taxes.

Marriage Penalty...or Bonus?

When a couple gets married they also may run into issues when their combined income sets them into the four higher tax brackets, because the income amounts for married couples is not strictly doubled as it is in the lower brackets of 10 and 15 percent. This often occurs when both the husband and wife make a substantial amount of money. However, when there is a large difference in the salaries of the spouse's they are sometimes entitled to a tax bonus. There were laws set in effect in 2001 to minimize the tax penalty for those newly married, however some couples are still hit with this penalty.

Selling Your Home

When a married couple decides to sell their home, this gives them a tax break that is twice as large as a single person. Actually, if a couple lives in their home two of the five years prior to selling, they can receive a $500,000 tax break where a single person would only receive half that amount. Even if your spouse passes away, as long as you sell the residence within two years of their passing, you can still receive the full $500,000. This can be a huge burden lifted if you do not have to pay taxes on this amount for the selling of your home.

It is essential that any women who gets married and changes their name file this information with the Social Security Administration. Your Social Security Number is what your tax information is based on and a wrong name could cause the return to be rejected by the IRS. If this happens you could face penalties and late fees for not filing in a timely manner. Understanding your responsibilities when you get married is essential in ensuring your taxes are filed correctly and in a timely manner.

In January 2013, the IRS announced several tax increases that would be affecting people who file as ‘married’, and file as ‘independent’. Be sure to stay up to date with your states latest tax laws!



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