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October 27, 2021

TAS Tax Tip: Got married? Here are some tax ramifications to consider and actions to take now

Recently Newlywed? Saying

Did You Get Married this Year or Plan to Marry Before Dec. 31st?

If yes, read on…

When you get married, your tax situation changes. Your marital status as of Dec. 31 determines your tax filing options for the entire year. State law determines whether you are married. If you’re married at year-end, you have two filing status choices:

  1. filing jointly with your new spouse; Married Filing Jointly
    or
  2. filing separate from your spouse; Married Filing Separately

Tax Responsibility Considerations for Married Couples

Most married couples file jointly because it is simpler and often more financially beneficial. Filing jointly also makes you eligible for many tax deductions and tax credits. However, if either spouse owes back taxes, whether federal or state, or owes certain other non-tax debts, such as delinquent child support or student loans in default, the IRS may offset your joint tax refund to satisfy the individual debts. Also, individuals who file a joint return incur “joint and several liability” as explained below.

Here are some terms you should be familiar with when deciding how to file:

  1. Joint and Several Liability. This arises when you file jointly with your new spouse. This means the IRS can collect a joint liability from either you or your spouse even after you’ve divorced if you filed a joint federal income tax return. The IRS can assert joint and several liability for you even if a divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. For any year that you file a joint return, you’re generally “jointly and severally liable” for any federal income tax underpayments, interest, and penalties caused by your new spouse’s unintentional tax errors and omissions or deliberate tax offenses. If you file separately, you’ll have no liability for your spouse’s outstanding federal tax debts.
  2.  Innocent Spouse. If you can prove that you didn’t know about your spouse’s tax deficiencies, had no reason to know, and didn’t personally benefit, you can file a claim for exception to the joint-and-several-liability rule under the innocent spouse provisions.

The three types of relief available are:

  • Innocent spouse relief
  • Separation of liability
  • Equitable relief

Each type of relief has different requirements. See IRS Publication 971, Innocent Spouse
Relief for more information.

So, filing separately may seem like a good idea if you’re aware of prior tax and other liabilities of your spouse and don’t want to be responsible for them, but there’s potentially a downside. Filing separately may make you ineligible to claim certain tax deductions and tax credits. For example, you can’t take the credit for child and dependent care expenses in most cases. In addition, you can’t claim the earned income tax credit (EITC). Refer to IRS Publication 501, Dependents, Standard Deduction, and Filing Information, for more information on how tax filing status effects certain potential tax benefits you could claim.

One last thing you should know about choosing a filing status — once you file a joint return, you can’t choose to file separate returns for that same year after the due date of the return.

Ultimately, the choice of filing status is up to the both of you.

Related Items to Consider and the Actions Needed

Here are some other tax filing related items to consider when you get married:

  1. Social Security Number (SSN): You must update the Social Security Administration (SSA) with your new last name, if it has changed, or if both spouses hyphenate their last names after getting married. When newlyweds file a federal income tax return using their new last names but don’t update their records with the SSA first, the IRS’s computers can’t match the new name with the SSN on file, causing the IRS to reject or return the tax return for correction. If you are claiming a refund, this could delay receipt of your refund. Refer to the SSA website for more information on how to update SSA records at www.ssa.gov.
  2. Change of Address: If you move, notify the IRS immediately of your new address so you may receive any refund or IRS notices or letters at your new address. This change will apply to account information before you got married and will ensure the IRS sends correspondence to the right address, no matter to what tax year it applies. You can change your address when you file your federal income tax return, or if you have already filed your return, you may file IRS Form 8822, Change of Address. You should also notify the U.S. Postal Service to forward your mail by going online at www.usps.com or visiting your local post office.
  3. Adopted Children: If you adopted your spouse’s child(ren) after getting married, make sure each child has an SSN for any related tax benefit claimed on a federal income tax return. Refer to the SSA website on obtaining an SSN. The following IRS Publications are good resources about tax credits, including rules for children and dependents, IRS Publication 929, Tax Rules for Children and Dependents, IRS Publication 972, Child Tax Credit and IRS Publication 970, Tax Benefits for Education. You may also go to IRS.gov for more information on any of these topics and others.
  4. Community Property States: If you live in a community property state and file married filing separately, you may need to allocate some of your income to your spouse and vice versa. The rules can get tricky. Refer to IRS Publication 555, Community Property for rules for filing a federal income tax return in this situation.
  5. Home Exclusion Sales: If both spouses enter a marriage each owning a home and eventually sell one or both homes, you could each potentially claim a $250,000 gain exclusion on the sale of each home, if you meet the ownership and residence rules. The exclusion is $500,000 for a married couple filing jointly. See IRS Publication 523, Selling Your Home for more information.
  6. Retirement accounts: After getting married you may want to review your retirement plans to evaluate whether any changes need to be made to maximize retirement savings (Retirement Topics – IRA Contribution Limits or Retirement Topics – Contribution Limits) or to the named plan beneficiaries. See Changes in Your Life May Affect Retirement Planning for more information.
  7. Healthcare coverage: Changes to income or family size are often called ‘changes in circumstances’ for purposes of the Premium Tax Credit (PTC). If one or both of you are receiving advance payments of the PTC credit and you have a change in circumstances, like getting married, you should promptly report it to your Marketplace as it directly affects both the amount of advanced payments you can receive and the total credit you can claim on your tax return.
  8. Other general tax concerns for newlyweds are listed on IRS.gov at Summer Newlyweds Should Also Think About Taxes and a tax checklist for newly married couples.

The rules can be complicated when deciding the filing status, depending on each of your tax situations. If you have any questions about what filing status is best, you may refer to the IRS website or consult a tax professional.

More Life Event Information

For a full list of life events that have tax implications, see Managing Your Taxes After a Life Event.

Taxpayer Advocate Service Resources

IRS Resources

  1. Marriage or Divorce – Check your Social Security Number
  2. Publication 5152, Report Changes to the Marketplace as They Happen
  3. Kay Bailey Hutchison Spousal IRA Limit