Divorce; Death of Spouse; Buying a Home; Having or Adopting Children; Marriage. There will be big events in your life that will have an effect on both your taxes and your daily life. Several of those events are listed below:
Marriage - If you just married or thinking about doing so, you should be aware that after you are married, you can no longer file returns using the single status. Instead, you will often file a joint return with your spouse using the married filing jointly (MFJ) status. When you file an MFJ, all of the income earned by both spouses is merged into a single return. If both spouses earn a sizable amount of money, your combined incomes may put you in a higher tax rate. But another advantage of filing an MFJ is that you may take a standard deduction that is twice as large as the standard deduction for a single taxpayer. In order to avoid unpleasant surprises when it comes time to file taxes, it may be advisable for a couple planning a wedding or even for those who recently got married to estimate the differences between filing as single and filing married. To account for the MFJ status, withholding adjustments may be necessary. Remember that filing status is established on the final day of the tax year; so,regardless of when you get married throughout the year, you will be treated as a married person for the whole year for tax purposes. Following your marriage, you should complete the following tasks:
• Report any name changes to the Social Security Administration so that your name and SSN are in agreement when you file your subsequent tax return. It is quite easy to notify the SSA of a name change, and you may do it online. You may also contact the SSA by phone at800-772-1213 or go in person to a nearby SSA office. If your name and SSN don't match when your return is filed, you risk having your income tax refund delayed.
• Notify the IRS - Fill out Form 8822 Change of Address, and mail it to the IRS if you
have a new address. • Notify the U.S. Postal Service - You should also inform the U.S Postal service of any address changes in order for any mail from the IRS or state tax authority to be routed to your new address
• Inform the Health Insurance Marketplace - If you or your partner is purchasing health insurance through a government-run exchange, your combined incomes and any changes to your family's composition may reduce the amount of the premium tax credit to which you would otherwise be entitled, necessitating repayment of some or all of the credit that was applied in advance to lower your monthly premiums. Even more challenging, the insurance premiums must be transferred from your parents return to your return if either or both of you are covered by their marketplace policy.
You should be aware of the following tax-related matters when submitting a combined return:
Previous Debts of the New Spouse - The IRS will use your future combined returns to settle any outstanding bills owed by your spouse, including back taxes, past-due child support obligations, past-due state income tax liabilities, and state unemployment debts. You have the right to request your part of any tax refund be returned to the IRS by submitting a "injured spouse" allocation form if you are not accountable for your spouse's debt and do not want it used to settle their previous debts. You can also use the "married filing separate" filing status to file separately, although the overall tax will often be greater.
Comments