Sunday, February 12, 2012

Tax Filing Status Is Not Set In Stone

Tax PreparationTax Preparation (Photo credit: agrilifetoday)
This tax season many people will be changing their tax filing status from single to married. It's all so exciting for the newlyweds new life together. To make it more interesting you and your spouse can now file joint tax returns.
Your filing status is an important part of your tax return because if used incorrectly you could be paying to much in taxes. Many people do not realize that you don't have to continue to use the one filing status, you can change it depending on the tax implications.

“Newlyweds and married taxpayers can choose to file jointly or separately based on their individual situation, but keep in mind that this filing status can change each year,” said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. “Generally, using the ‘married filing jointly’ status provides the lowest tax liability and the highest standard deduction. However, if one of the filers has large deductions or expenses, the ‘married filing separately’ status may be more beneficial.”

Some rules you need to keep in mind.

  • The Internal Revenue Service recognizes a couple’s marital status on the last day of the year. Even couples who wed right before midnight on December 31 are considered legally married for the full 2011 tax year;
  • Couples should note that certain credits, including the Child and Dependent Care Credit, the Earned Income Tax Credit and certain education credits, are not available under the “married filing separately” status; and,
  • Tying the knot often results in a new last name. Names listed in your tax return should match all forms of identification, including social security card, passport, driver’s license and documents from employers, loan holders and investment accounts.

Make sure you seek out professional tax advice when choosing a tax filing status. The money you spend on this counsel will benefit you with only paying the minimum tax owed.

No comments:

Post a Comment

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics