Tax Tips and Tidbits
This week’s Tax Tips and Tidbits focuses on another topic that causes confusion among taxpayers: Marriage. No, I’m not going to give you advice on what makes a successful marriage! The fact is that there are many questions, and a lot of erroneous advice flying around out there. So here are some points to remember.
- For tax purposes, marital status is determined on the last day of the year. This means that if you rush off to Vegas to get married on New Year’s Eve, you are considered married for the entire year for tax purposes. Likewise, if your divorce papers come through on December 30th you will be considered single for the entire year.
- The same is not true if your spouse dies during the year. In this case you marital status is determined on the day your spouse died. This allows the surviving spouse to file jointly one final time.
- There is no dual filing status. There is no such thing as filing single for half the year and married for the other half. You are one or the other for the entire year, based on your status on December 31.
- If you are married on the last day of the year you can’t choose to file as single. Once you are married, you have a choice to file either married filing jointly (MFJ), or married filing separately (MFS). (See the exception below.) There is no option to file as single. MFS is the highest taxed filing status, and many potential credits are eliminated, so there is very rarely a good tax reason to file separate, although there are other factors besides taxes that could influence that decision.
- If you are separated, but not divorced, you are still considered married for tax purposes. Even if you have not seen your spouse in many years, you still must file either MFJ or MFS.
- Married filing Joint is an election. This means that both spouses must agree to file jointly. If one spouse does not want to, the other spouse has no choice but to file MFS.
- If you choose to file MFS and one spouse itemizes deduction, the other spouse must do so too. If one spouse itemizes then the other spouse’s standard deduction is zero! This is to prevent a couple filing MFS to get more deductions than they would be entitled to filing MFJ.
- Certain married individuals may qualify to be considered unmarried for tax purposes. This is the exception that I talked about earlier, and it’s an important one! A married person can be considered unmarried for tax purposes if he or she meets all the following requirements:
- The taxpayer did not live with their spouse at any time during the last six months of the year (temporary absences like school, military service, or medical care count as time in the home), and
- The taxpayer paid over half the cost of maintaining a home, and
- That home was the main home for over half the year of the taxpayer’s dependent son, daughter, step son, step daughter or foster child.
Being considered unmarried means that the taxpayer will qualify to use the Head of Household filing status, which offers considerable tax advantages over MFS.
There are many flow charts and interactive tax trails on the IRS website that will help taxpayers if you are willing to use them.
One last tidbit: even though the tax law ends the marital relationship with death or divorce, the in-law relationship continues! So your in-laws are your in-laws for life!
Next week we will discuss the growing problem of tax identity theft.
This written advice is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.
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