Marriage and taxes, most people don’t think of the two terms together, but marriage can make a significant change to your tax return.
I’ve reviewed and worked on several returns for individuals that have always prepared their returns as single and didn’t realize that by getting married they are required to file their taxes differently. This holds true no matter which day you are married, if you are married as of December 31st of the year then you would file your tax return as married.
There are typically two different filing status you can choose once you are married they are filing joint or filing separate (head of household does sometimes present as an option but only in certain circumstances). Typically filing joint produces a lower tax liability but that isn’t always the case, most software will produce a report to help preparers determine which options is most advantageous but as the taxpayer you should double check that your preparer is considering the possible tax savings of filing separate. You can read more on the IRS website about Eight Facts About Filing Status.
If you choose to file married filing separate something important to remember is that either you both have to file using the standard deduction and one person miss out on some itemized deductions or you both have to file using itemized deductions which in many cases one individual won’t have many deductions. Filing separate at times depending on the income and deductions can save you money, but most of the time the reason for filing separate is because of disagreements about taxes or disagreements in the relationship. If one spouse is unsure of how the other is handling reporting of income and don’t want to be held liable, then it is wise for them to file separate. If the couple is going through a split or divorce sometimes it is better to file separate to avoid arguments of who gets what portion of the refund or who owes which portion of the taxes.
While there can be tax savings to filing joint something to keep in mind is that once you both sign the return, you are both responsible for what was reported on the return as well as any taxes due on that return. It is a good idea to know what your spouse has for income and how it is being reported so that when you sign the return you know what liability you are subjecting yourself to. If one spouse doesn’t report income or reports it incorrectly and the IRS finds that omission or error you both are responsible for paying the taxes on that income. In addition when filing a joint return, we as preparers are allowed to discuss that return in its entirety with both spouses, since both are responsible and liable for the return both are allowed to know exactly what is being reported as income and deductions.
I would recommend if you are married or getting married you find an accountant you are both able to talk to and work with so that you can all work together to minimize taxes while eliminating liability for both spouses.
The Wassman CPA Services website and blog is meant to offer general information to our readers. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service. You should contact Wassman CPA Services for advice concerning specific matters prior to making any decisions.
