Monday, February 9, 2015

Be careful with those tax filings if you just got married

Tracy Bunner for the Standard Examiner writes:  When a taxpayer marries during the year it can affect the tax return.
A taxpayer is considered married if on Dec. 31 the taxpayer was married. This leaves only two options when filing a return: Married Filing Jointly or Married Filing Separately.
There have been some disappointed taxpayers that were single with children and normally received large refunds that married during the year, only to find out that the refund is substantially lower than previous years.
When a taxpayer with children marries at any time during the year all income in the home must be considered when filing a return. The Head of Household filing status is not available if the taxpayer lived in the home at any time during the year with their spouse. Filing a Married Filing Separate return does not give the same benefits as when the taxpayer was Head of Household.
One huge change is the Earned Income Credit. This credit is totally eliminated when choosing the Married Filing Separate filing status. The credit may also be eliminated when all income from both spouses exceeds the income threshold for the credit.
Married Filing Separate also eliminates other credits such as Student Loan Interest and the Education Credit. It also carries limits regarding deductions. If one spouse itemizes the other spouse must also itemize. What this means is if the mortgage interest is in one spouse’s name and the filing status is Married Filing Separate, only one spouse can use the deduction. SNIP, the article continues at the Standard Examiner, click here to continue reading....