Most weddings planned for 2020 were delayed because of COVID, causing a big upswing in the number of weddings in 2021. Although tax issues are the furthest thing from their minds during this big life-changing event, newlyweds should know how tying the knot can affect their tax situation. There are actions they need to take to avoid problems and unfortunate tax surprises. If you are newly married, here’s a checklist of “to do’s” to help you:Continue reading →
Couples who are married on the last day of the tax year basically have two filing status options when filing their tax returns: either married filing jointly (MFJ) or married filing separately (MFS) returns. Generally, filing MFJ will produce the better tax result. However, other factors – usually personal or financial rather than tax-related – can come into play that cause taxpayers to choose to file MFS returns.
Whatever the reason for filing MFS, the consequences encountered when filing separate returns are as follows.
Taxpayers are frequently blindsided when their filing status changes because of a life event such as marriage, divorce, separation or the death of a spouse. These occasions can be stressful or ecstatic times, and the last thing most people will be thinking about are the tax ramifications. But the ramifications are real, and the following are some of the major tax complications for each situation.Continue reading →
A taxpayer’s filing status for the year is based upon his or her marital status at the close of the tax year. Thus, if you get married on the last day of the tax year, you are treated as married for the entire year. The options for married couples are to file jointly or separately. Both statuses can result in surprises – some pleasant and some unpleasant – for individuals who previously filed as unmarried.
Also, the couple needs to notify their employers of their new marital status so any affected benefits can be updated. Usually new W-4 forms should be prepared and given to their employers so income tax withholding can be revised for the new filing status.Continue reading →