Articles

Marriage and Taxes by Joanie B. Stein, CPA


Posted on May 12, 2015 by Joanie Stein

Saying “I do” is a significant life event that will lead to many changes along the road to happily ever after. Among these changes are a range of legal and financial issues that couples should address as early as possible.

 

Change in Name

Individuals who elect to take the last name of their new spouse must first obtain certified copies of their marriage certificates to begin the process of legally changing their names. Start by contacting the Social Security Administration and Department of Motor Vehicles followed by banks and managers of financial accounts, the U.S. Postal Service, employer and benefits plan administrators and the Internal Revenue Service.

 

Change in Tax Status

One’s marital status affects how he or she files taxes and the related income tax rate that will apply. Selecting the appropriate filing status will depend on a number of factors, including each spouse’s income level and availability of credits and deductions. Ultimately, the decision should be made with the guidance of a qualified tax professional.

 

The following table from the IRS shows the tax rates based on taxable income for the 2015 filing season.

Marginal Tax Rate Single Married Filing Jointly Married Filing Separately
10% $0 – $9,225 $0 – $18,450 $0 – $9,225
15% $9,226 – $37,450 $18,451 – $74,900 $9,226 – $37,450
25% $37,451 – $90,750 $74,901 – $151,200 $37,451 – $75,600
28% $90,751 – $189,300 $151,201 – $230,450 $75,601 – $115,225
33% $189,301 – $411,500 $230,451 – $411,500 $115,226 – $205,750
35% $411,501 – $413,200 $411,501 – $464,850 $205,751 – $232,425
39.6% $413,201 or more $464,851 or more $232,426 or more

 

As the table demonstrates, two working spouses filing a joint return will not get the same benefit as two single people filing separate tax returns.  When high-earning couples combine their incomes, they may be pushed into a higher tax bracket for which more taxes will be due. This also applies when taking into consideration additional taxes and phase outs of adjusted gross income above certain thresholds.

Change in Withholding

Because marriage may affect couples’ tax liabilities, it is important to ensure that the amount withheld from each spouse’s paycheck matches the amount they will owe the government at the end of the year. Often, making this alignment requires one or both spouses to adjust the number of withholding allowances they claim on their W-4s with their employers.

It is important that taxpayers meet with qualified accountants before and after major life events to ensure that they maintain tax efficiency through their changing circumstances.

About the Author: Joanie B. Stein, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice. She can be reached in the CPA firm’s Miami office at 305-379-7000 or via email at info@bpbcpa.com.