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Marital Impact on Your Taxes

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Steven E Miller, CPA PC

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What to Do After You've Said "I DO"

Getting married is a legal transaction and has many consequences.  But, there are potential complications and details you want to take the time to deal with and be aware of.  While not very romantic, you don’t want problems and issues coming around to dull your newly married bliss.

Milestone Events In Your Life

Marriage, birth of a child, divorce, retirement and death of a spouse are major events in one’s life.  These events also have potential tax consequences.  Here are a few things to think about:

  • NAME CHANGES – whether changing both your names, adding hyphens or simply changing addresses, you want to update the proper government agencies. 
  • Any names changes should be reported to the Social Security Administration [SSA] without delay.  The IRS and Social Security Administration match names on tax returns.  Failure to notify them of these changes most likely will result in a rejected tax return.
  • It is also a good idea to notify the IRS of name changes and/or address changes via the Form 8822.  You want your wage statement Form W-2 to match Social Security Administration’s records where possible. 
  • Don’t forget to obtain a new Social Security card so your earnings properly show up on your earnings history with Social Security Administration.
  • To report a name change and obtain a new card, complete Form SS-5 online at Social Security and mail it in or drop it off.  You will also need to submit proof such as an original marriage license for your name change.

Where's My Tax Refund?

Have you heard of the “marriage penalty?” 

Getting married changes your income tax filing status.  Your filing status along with your earnings impact the total tax you will owe. 

The majority of taxpayers have income tax withholding taken from their wages each pay period.  The amount of taxes withheld varies based upon your marital/filing status.  If you both are gainfully employed or have self-employment income, the change in your marital status may result in an unpleasant surprise when you go to file your tax return.  This often happens when both spouses earn about the same amount, their combined tax liability may be higher than if they were still single.

Take the time to project your total earnings and income for the year along with your taxes being withheld.  Will you run short?  Filing new Forms W-4 with your employers allows you to adjust for shortfalls.  If you are getting married in the last quarter of the year, run the estimate much earlier so you have time for adjustment.

If only one spouse earns the money, marriage may lower the overall tax burden.  In such a case, you don’t want to give the IRS a big interest free loan until April 15th.  Those taxpayers that are self-employed make their payments quarterly but still need to run the numbers to see if they need to increase or otherwise adjust their quarterly tax payments.

Marriage Tax Considerations

  • If you are married even on the last day of the year, you are considered married for the entire year (in the eyes of the Internal Revenue Service).  You can no longer file as single.
  • Married Filing Separately status may be available but typically does not result in lower total tax bills.
  • Be sure to update beneficiary designations for retirement accounts and life insurance policies.
  • Update signature forms for bank accounts.
  • Have a Last Will & Testament along with all the requisite Medical Power of Attorney forms and the like.
  • What changes are needed for investment accounts?
  • Establish utility accounts in both names if one spouse is not employed so they may create or maintain a credit history.
  • Should you establish additional retirement accounts such as IRA’s or Roth IRAs?
  • Money management and simple budgeting has the opportunity to avoid one of the biggest issues in marriage – NEVER ENOUGH MONEY!

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15150 Preston Rd. Suite 210 , Dallas, TX 75248
Call Us: (214) 361-1131 • Fax: (214) 253-2138