CARL WATTS & ASSOCIATES

August 03, 2014

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Newlyweds and
Tax Changes
The celebrated Goethe once said: “The sum which two married people owe to one another defies calculation. It is an infinite debt, which can only be discharged through eternity.”

Dear all, rest assured, the IRS calculations are in no way infinite and sometimes may even be to the advantage of those of you who have recently decided to tie the knot, your destinies and resources together.

As many different and marvelous things that marriage may mean to each of us, from the IRS point of view, marriage certainly means some important changes that you should take into account rather earlier than later.

If you change your name when you get married, you should know that the names and Social Security numbers on your tax return must match your Social Security Administration records. To report the name change to the SSA, you must file Form SS-5, Application for a Social Security Card.

If the name on your tax return does not match the name Social Security has for your Social Security number, any tax refund you have coming will be delayed until the discrepancy is resolved. If you're up against the tax deadline and don't have time to change your name with Social Security, you can file a joint return with your husband using your maiden name (the one that matches your Social Security number) and then straighten things out in time for next year's filing season.


Once your marital status has changed and you decide to file a joint tax return, you must also give your employer a new Form W-4, Employee's Withholding Allowance Certificate. As a couple, you should combine your income, deductions and credit information to come up with a single number of allowances to claim. Then you can divide them however you choose, recognizing that each allowance is worth more (in terms of reduced withholding and more take-home pay) to the higher-earner.

Let the IRS know if your address changes. To do that, file Form 8822, Change of Address. You should also notify the U.S. Postal Service. You can ask them online to forward your mail. You may also report the change at your local post office.


If you receive advance payment of the premium tax credit in 2014, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

If you’re married as of Dec. 31, for filing status purposes, you are married for the full tax year. You and your spouse can choose to file your federal income tax return either jointly or separately each year.


You may want to figure the tax both ways to find out which status results in the lowest tax.

Married couples filing a joint return get to claim two personal exemptions (one for each of you) on the tax return instead of one as when you filed as a single individual. Additionally, the standard deduction allowed on the tax return is highest for married couples filing a joint return.


Joint filing typically is a good idea if you both work and one makes considerably more than the other. Combining incomes could bring the higher earnings into a lower tax bracket. Some tax credits are only available to a married couple when they file a joint return. And logistically, it's easier to deal with just one return.

If you decide to file separately, you should keep in mind that if one spouse itemizes on his or her separate return, the other spouse also must itemize. That could pose a costly problem for a spouse who has no or few itemized expenses and would be better off claiming the standard deduction.

Separate filing also is recommended when a spouse has concerns about tax claims the other wants to make. In most situations, when couples file jointly, each partner accepts equal responsibility for any tax due or penalties that might be assessed if problems arise with the return.

Note for same-sex married couples: If you are legally married in a state or country that recognizes same-sex marriage, you generally must file as married on your federal tax return. This is true even if you and your spouse later live in a state or country that does not recognize same-sex marriage. Same-sex couples are now treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.

Other important tax changes that you can take advantage of once you get married include:


  • The home sale exclusion, which is twice as large for a married couple. By living in the property for at least two of the five years before selling, a couple can exclude from tax up to $500,000 in sale profits versus $250,000 for single sellers.

  • The Estate tax marital deduction, which allows the surviving spouse to pay no federal state taxes. If the surviving spouse remains unmarried in the year that their spouse died, they can file their tax return jointly, taking into account the deceased spouse's income. This allows them to take advantage of the larger standard deduction and potential credit claims.

  • For estate planning purposes, you should know that spouses are allowed to give unlimited gifts of cash or other property to one another free of gift taxes.

Getting married may also be the best moment to start doing some serious financial planning for the family, which typically includes tax planning as well as investment, retirement, business and estate planning.

We couldn’t end this newsletter without congratulating and wishing the best to all the newlywed.
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