Tax LawDid you recently say I do?  Changing your Facebook status from single to married, isn’t all you need to do.  The myriad of personal changes also requires updated statues with the Internal Revenue Service (“IRS”) and Social Security Administration (“SSA”).

  • If you’ve changed your last name then notify the SSA. Your new last name and Social Security Number need to match on your next tax return.  Report the change to the SSA by filing Form SS-5, Application for a Social Security Card www.ssa.gov.
  • If you’ve moved to a new address then notify the IRS. File IRS Form 8822, Change of Address (PDF), it’s the official way to update the IRS of your address change.
  • Determine the Best Filing Status. A person’s marital status on Dec. 31 determines whether the person is considered married for that year for tax purposes. Tax law generally allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Consider the following:
  1. Married Filing Jointly.  If you are thinking of filing Married Filing Jointly, BOTH spouses are jointly and individually responsible (commonly referred to as Joint & Several Liability) for the tax and any interest or penalty due on the joint return even if you later divorce. Even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns, one spouse may be held responsible for all the tax due.  To avoid being held jointly responsible for a spouse’s liability, spouses can file married filing separately. Before choosing a Filing Status, you should speak with a Tax Attorney to understand the severity of this filing status.
  2.  Marriage Penalty. Two people in the mix likely means MORE income, as a result your income tax liability as a married couple may exceed what was otherwise your combined income tax liabilities as singles. This additional tax burden resulting from marriage is referred to as a “marriage penalty” (or “marriage tax”). Marriage can also reduce the federal tax liability of two people, in which case the reduction in tax is called a “marriage bonus” (or “marriage subsidy”).  To understand more about how this impacts you, you should speak with a Tax Attorney.
  3. Alternative Minimum Tax. Now that you have MORE income, you might owe more tax, the alternative minimum tax (“AMT”) to be exact.  You should speak with a Tax Attorney regarding this potential additional liability. You pay the AMT at the same time you pay your income tax, in fact it is determined from the same dollars and cents that get put on your Form 1040, with a very different calculation of course.  Greatly simplifying the AMT, the tax is calculated without all of the special deductions and credits, which could result in the payment of additional tax.
  •  Don’t forget about all of your potential tax changes:
    • Employed? Notify your employer to report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
    • Check your withholding. You may want to change your Form W-4 with your employer to change your exemptions if your recent nuptials bumped you into a new tax bracket. Talk to your Tax Attorney or use IRS Publication 505, Tax Withholding and Estimated Tax (PDF), to help determine the correct amount of withholding(PDF).
    • Next time you file make sure you select the right tax form.  Newlyweds may find that they now have enough deductions to itemize on their tax returns rather than taking the standard deduction. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ

If you recently said “I do,” you should contact a Tax Professional who is familiar with the Tax ramifications of marriage.  The Tax Attorneys at Reid & Hellyer APC in Riverside, Temecula and Orange County are familiar with the US Tax Code and Regulations.