TAX TIP OF THE DAY... IRS has wedding gift for newlyweds: MARRIAGE PENALTY.
Many newlyweds are thrilled to file their first tax return as a married couple until they realize that their refund is less. It's normal. It's not your fault. The MARRIAGE PENALTY affects some and not others. It can penalize you hundreds of dollars. There is no planning that can be done to avoid this other than not to get married... and the accountant that recommends that will be fired before the last word rolls off the tongue! So just live with this marriage penalty... it goes along with losing closet space. You don't have a choice, so don't complain too loudly.
This is what you need to know:
1) If you are married on 12/31 of the tax year, you are considered married for the entire year.
2) The marriage penalty may not affect you if one partner's income is significantly greater than the other.
3) You can't avoid the marriage penalty by filing as "single". Once you are married you are NOT ALLOWED TO FILE AS "SINGLE". You can file separate, but that filing status is "married filing separate" which usually yields horrible results.
4) If you do file separately and one spouse deducts itemized deductions (interest, taxes, charity), the other spouse must also use itemized deductions too. It usually makes sense to file jointly for this reason.
Getting married means a different set of tax rules and different tax tables.
THIS POSTING SHOULD ONLY BE READ AFTER YOU ARE MARRIED!!!
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If you need any help... www.baboiancpa.com