Preparing taxes can be complicated, and with two people involved it becomes more complex. It's not enough just to add your respective amounts together. There are limits and restrictions that you have to be aware of in order to comply and get the best outcome.
As married filers, you have a lot of options for structuring your tax obligations. At the same time, there are many traps, particularly if you have only ever filed as a single person. A good accountant can help you navigate the complicated path of tax issues of married people. Keep reading for 30 of the biggest tax problems married people encounter.
When preparing your taxes, you first need to determine your marital status. It might seem like a straightforward task, however, life is not always straightforward — and the IRS does have specific rules for determining your marital status for tax-filing purposes. The IRS considers you to be married if you were lawfully wed before midnight on the last day of the tax year.
For example, if you tied the knot at any time in the past and were still married on Dec. 31, 2015, then, in the eyes of the IRS, you're married to your spouse for all of tax year 2015. The laws of the state where you lived on Dec. 31 determine whether you were married or legally separated for that tax year.
If you weren't married on Dec. 31 of the tax year, then the IRS considers you to be single, head of household or a qualified widow(er) with a dependent child for that year. However, there are three filing possibilities if you were married.
To prepare your return accurately, you need to determine which filing status applies:
- Married filing jointly
- Married filing separately
- Head of household (this category is subject to strict rules)
If more than one category might apply to you, pick the one that means you have to pay the least amount of taxes.
Most of the filing statuses are relatively clear. However, if you're married and you don't qualify to file as head of household, you typically then have two choices: filing jointly or file separately. It's best to choose the one that allows you to pay the least amount in taxes, which all comes down to your particular circumstances.
"The biggest issue for married couples is often to decide whether to file jointly or separately," said Jeff McGowan, tax partner at Kruggel Lawton CPAs. "However, there is no penalty or defined cost of a decision like this. It’s really something couples should discuss with their tax advisors and plan for ahead of time."
If you want to change your last name after marriage or divorce, you must officially inform the federal government. "If a spouse decides to change their name after marriage, they must notify the Social Security Administration prior to filing their return with the IRS," said McGowan. "Not doing so will cause delays."
This is because the name on your tax return won't match the name that's associated with your Social Security number. You can file form SS-5 with the SSA to officially change your name, he said.
"If you’re up against a tax deadline and don’t have time to notify the SSA, simply file your tax return with your maiden name (the one matching your Social Security number) until you can get things sorted out the next year," he added.
If your spouse died during the year, you'll need to figure out your filing status. If you didn't remarry someone else the same year, then you may file with your deceased spouse as married filing jointly.
If you did remarry, then you and your new spouse may file jointly, but then you and your deceased spouse must file separately for the last tax year of their life. In addition, if you didn't remarry during the tax year of your spouse's death, you might be able to file as qualifying widow(er) with dependent for the following two years if you meet certain conditions.