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Marriage and Taxes-Married Filing Jointly or Separately

the marriage taxIf you got married this year, congratulations! Getting married is a big step in your life and will also impact your tax return. Let efile.com help you with the tax part-answer a few simple questions during the efile tax interview and we'll select the correct form(s) for you based on your answers-it's that easy!

Take a look at some important information that will help when planning your taxes or preparing your tax return now that you are married:

What Is My New Filing Status Now That I Am Married?

Your filing status is important and is used for many things on your tax return such as: 

Your filing status depends partly on your marital status on the last day of the year. If you're legally married as of December 31, you're considered to have been married for the full year and must file as either Married Filing Jointly or Married Filing Separately.

What is the Married Filing Jointly Status?

You use the Married Filing Jointly status to include all you and your spouse's income, exemptions, deductions, and credits on one tax return. Even if you or your spouse had no income or deductions, you can still file a joint return. 

What is the Married Filing Separately Status?

You use the Married Filing Separately status to report your own income, exemptions, deductions, and credits on two separate tax returns. Even if only one of you had income, you can still file a separate return.

However, the Married Filing Separately status rarely works to lower a family tax bill. For example, you can't have one spouse itemize and claim all the deductions while the other claims the standard deduction. Both spouses must either itemize or use the standard deduction. You can't mix and match.

If you file a separate tax return, many tax breaks will be limited or completely unavailable to you:

How Do I Determine Whether Filing Married Jointly or Separately is Right for Me?

Use our free STATUcator tax tool to find out which filing status is right for you. Answer a few simple questions and the tax tool will give you a filing status. 

Alternatively, you may want to prepare two tax returns with each filing status, and then select the filing status that gives you the best result for your specific tax situation. On efile.com, you can use one account to easily switch from one filing status to another, and you will not be charged until you are ready to efile or print your completed return.

Is There a Marriage Penalty and Marriage Bonus?

A sign that the honeymoon is over:
She begins to feel like she was never anything more than a tax deduction to him!

You've probably heard about the marriage tax penalty: the idea that a married couple pays more income tax than they would have to if they remained single. But a lot of people don’t know that married couples actually get a marriage bonus, and often pay less income tax than they would if each partner were single. This is because of the graduated nature of the tax rates, which applies higher tax rates to higher income rates.

This is how the marriage penalty might get you: when you combine incomes on a joint return, some of that income can push you into a higher tax bracket than you would be in if filing as single. In recent years, Congress has made large strides toward alleviating the marriage penalty. The top of the first two tax brackets on joint returns are now precisely twice as high as the ceilings on single returns (they used to be less than double).

As higher incomes fall into higher tax brackets, the breakpoints on a joint return aren't quite double the level on a single return. If the spouses' incomes are unequal, it is possible that combining them on a joint return will pull some of the higher-earner's income into a lower tax bracket. That's where much of the marriage bonus comes from—when one spouse often makes much more income than the other. Of course, this could also push the higher-earner into a higher tax bracket..

Do I Need to Modify My Tax Withholding?

Once you’ve tied the knot, you and your new spouse will need to adjust the tax withholding from your paychecks. After you determine your number of allowances, you can divide them however you choose between you and your spouse, recognizing that each allowance is worth more to the higher-earner in terms of reduced withholding and increased take-home pay.

Don’t make the mistake that many working couples do. Working spouses usually need to worry more about under-withholding than about over-withholding. Be aware that you may go into a higher tax bracket or be required to pay the Additional Medicare Tax by combining your incomes. 

The Form W-4 instructions include a worksheet that will walk you through the process of eliminating allowances. Your goal is to match your withholding with the amount you'll actually owe for the year, so you get neither a big tax refund nor a nasty tax surprise when you file your return.

Should I Coordinate My Fringe Benefits?

You and your spouse should draw up a list of the tax-favored fringe benefits at each of your workplaces. If you can be covered by your spouse's medical plan, for example, you may choose to trade your coverage for another benefit.

Should I Inform the IRS of My Name Change?

Yes, but you don't change your name directly with the IRS, but indirectly via the Social Security Administration (SSA), who automatically will inform the IRS about your name change.

For example, if you take your spouse's last name when you get married (or if you and your spouse hyphenate your last names), you need to inform the SSA of the name change. Once the SSA has approved and processed the name change, they will inform the IRS about your name change via your and/or your spouse's Social Security Number (SSN). That is because the SSN in the IRS and SSA records must be in sync as well. Be aware that a mismatch between the name and/or SSN on your tax return and the name in the SSA and IRS records can cause the IRS to reject your tax return. This would result in processing and delay issues with your tax return and tax refund until the discrepancy is resolved. What if my SSN does not match the SSN on file with the IRS?

Therefore, keep in mind, once you have submitted the name change form or applied online with SSA (see instructions below), it might take several weeks for the IRS to reflect your or your spouse's new name. During tax season, this might cause a rejection of your tax return. In that case, continue to use your existing names or old names as they are still on file with the IRS and SSA.

How Do I Change My Name With the IRS? 

In order to change your name with the IRS, you must complete SSA Form SS-5, Application for a Social Security Card, or submit your name change application online at ssa.gov. Alternatively, you can obtain the form at your local SSA office or by calling the SSA at 800-772-1213. Attach a recently issued document to your Form SS-5 that proves your legal name, then take or mail the form to your local SSA office. When you get your new card, you will see your Social Security Number (SSN) and new name. 

Once the SSA has changed your name, they will send the information to the IRS. This may take weeks before the IRS gets notified of the name change. 

What If I Do Not Update My Name with SSA and consequently Not with the IRS? 

If you did not change your name at all or you changed it late with the SSA before the filing deadline, you can file a joint return with your spouse using your old name (the one that matches your SSN) and then file the SS-5 before next year's filing season.

What Do I Need to Do If I Adopted My Spouse's Children? 

Please make sure that you have a SSN or Adoption Taxpayer Identification Number (ATIN) for each child you adopt so you can claim them on your tax return. You can apply for an ATIN by completing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, online here and mailing it to the IRS. Alternatively, you can obtain the form by calling 800-TAX-FORM (800-829-3676).

Can I Claim a Tax Break for Claiming My Adopted Children? 

You may qualify for the Adoption Tax Credit, which helps parents save taxes on expenses involved in adopting a qualified child under 18 years old. 

How Does Selling My House Affect My Marriage and Taxes?

The amount of home-sale profit that can be tax-free doubles from $250,000 to $500,000 once you are married. This assumes that you own the house and have lived in it for at least two of the five years prior to the sale. But what if your spouse sold their house before the wedding? The $250,000 limit still applies just as if they were still single. What if they sold the house after the wedding? Then $250,000 of the profit on the sale of the home can be tax-free.

Should I Change My Address with the IRS If I Moved in with My Spouse?

If you have moved to a new permanent address with your spouse, remember to update your address with the IRS. You can change your address with the IRS by filling out Form 8822, Change of Address, and mailing it to the address on the form.

You will also need to update your address with the U.S. Postal Service and your Health Insurance Marketplace.

Do I Need to Report Changes in Circumstances and Update My Premium Tax Credit?

If you buy health insurance from the Marketplace and receive advance premium tax credit payments, you should report your marriage (and other changes in circumstances such as income, birth of child, new job, home purchase, etc.) to the Health Insurance Marketplace. This will allow the Marketplace to update your premium tax credit amount, as well as help you avoid owing money or getting a smaller refund that you do not expect when you file your tax return.

What is the Right 1040 Tax Form for My Married Tax Situation?

If you're married, you may discover that you have enough tax deductions to itemize. In this case, you will need to use Form 1040 since you cannot claim itemized deductions on Form 1040-EZ or 1040-A. 

When you prepare your tax return on efile.com, you don't have to figure out which 1040 form to use. Start with any of the 1040 forms and our tax form auto select tool will pick the correct form for you based on your answers during a short tax interview. 

Related Marriage Tax Information