How does a marriage affect an individual's tax planning?

marriageMany Americans are fully aware that getting married will have a profound impact on their lives in a large number of ways, but one which they might not always consider is that it typically reduces a person's tax liabilities significantly. For this reason, though, it might be wise for newlyweds and those who will soon tie the knot to make sure they are fully aware of the tax-related impact of the move, and perhaps plan out a wise course of action with respect to their filings for the year.

One thing that consumers absolutely have to do if they're changing their names after their marriages is let the Social Security Administration know about the changes, because failure to do so can lead to huge tax filing problems down the road, according to a report from Boston television station WBZ. Another issue that will require notification is the newly married couple letting their employers know about the changes to their filing status.

Doing some homework
Another aspect of marriage affecting tax status is that the combined incomes of those who are married and planning to file jointly could push them into a new tax bracket, the report said. For this reason, they will have to look carefully at both what they paid before they got married, and what they would pay after. In some cases, but certainly not all of them, it might be wise for couples to decide they will continue to file separately despite their marriage, as a means of keeping their liabilities as limited as possible. Finally, it might also be wise for them to keep in mind their marriage status as of Dec. 31 is what they should use to file for the entire year, even if they got married on Dec. 30.

Working with a tax professional is often wise not only during filing season itself, but well in advance of the run-up to the April 15 deadline. This can help consumers, married or not, to find the best plans to reduce their ongoing liabilities and also maximize their deductions so that they can deal with any issues that might arise as quickly and easily as possible.

For a more in-depth look at Liberty Tax Service, visit the Give Me Liberty! Magazine. Follow Liberty Tax on Facebook and on Twitter or contact Liberty Tax directly at 1-877-at-Liberty.

Disclaimer: Tax Lounge is an informational source for industry news and related topics. We take every effort to provide you with the most honest and accurate tax information, but this information should not be a substitute for professional tax advice. Use our office locator to find your local tax office or click here to subscribe to our free newsletter.

Posted To: Tax Ranger's Blog By: Tax Ranger On: Wednesday, August 20, 2014
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