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Money Management (Distributed by the New Jersey Society of Certified Public Accountants)

An Income Tax “To Do” List for Newlyweds


Once the wedding bells have stopped ringing, it’s time for newlyweds to address a number of practical financial questions. Unromantic as it may sound, paying taxes is among the most pressing. Here are some tax-related suggestions from the New Jersey Society of Certified Public Accountants (NJSCPA).

Update Your Name and Address
If you changed your name when you married, you must advise the Social Security Administration to update your records and issue a new Social Security card by using Form SS-5. If you or your spouse has a new address, you should notify the IRS by completing Form 8822, Change of Address. Notifying the postal service and the IRS of an address change helps to ensure proper delivery of any refund checks and IRS correspondence.

Choose the Best Filing Status
Married persons may file their income tax returns either jointly or separately. Choosing the most beneficial filing status can help you save money on your taxes. When filing jointly, spouses combine their income and deduct their total expenses and deductions on a single tax return. Each must sign the return, and both spouses are responsible for its contents. With separate tax returns, each spouse completes, signs and files his or her own return. When filing separately, each spouse is responsible for his or her own tax return.
Generally, filing jointly results in a lower tax bill; but it’s a good idea to calculate your taxes both individually and jointly. If you file separately and one spouse itemizes deductions, the other spouse must do the same.

Understand the Marriage Penalty
The “marriage penalty” provision in the tax law applies to married couples with dual incomes paying more federal income tax on their combined income than they would pay if they were single. In recent years, there have been a number of tax law changes that provided some relief from the marriage penalty. Those changes were set to expire at the end of 2004.
Fortunately, late last year, the Working Families Tax Relief Act of 2004 extended those relief provisions through 2010. As a result, the 15 percent bracket for joint filers is double that of a single person. The law also allows married persons filing jointly to claim a basic standard deduction that is double that of single taxpayers.

Itemize or Not?
Amounts paid for medical care, mortgage interest, charitable contributions, casualty losses and certain miscellaneous expenses can reduce your taxable income, lowering your tax. Newly married taxpayers may find that by filing a joint tax return they can now itemize, rather than take the standard deduction. Use Form 1040T to itemize deductions.

Check on IRA Deduction
Taxpayers who were able to deduct Individual Retirement Account (IRA) contributions when single may find that they no longer qualify. If you or your spouse is covered by a retirement plan at work, you may be entitled to only a partial deduction or no deduction at all, depending on your Adjusted Gross Income (AGI) and filing status. Although you may not be able to deduct your contribution, amounts deposited into an IRA grow tax deferred and help to secure a comfortable retirement.

Meet with a CPA
A CPA can provide you with valuable advice for lowering your tax bill. It’s a good idea for you and your spouse to arrange for a consultation with a CPA now, while you still have time to implement tax-saving strategies. If you don’t have a CPA, you can easily locate one online using the NJSCPA Find-A-CPA service. Just go to www.findacpa.org to locate a highly qualified professional who is right for you.

If you would like to receive more information on various financial matters, subscribe to E-CPA, the NJSCPA's free, monthly email newsletter. To subscribe, visit www.njscpa.org/finances or email a subscription request to e-cpa@njscpa.org.

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Money Management is a weekly column on personal finance distributed by the NJSCPA.

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