Potentially Taxing: Getting Married Over the Holidays

If you got married this year or are planning to get married between now and New Year’s Eve, it could pay to sit down with a tax professional now to get a handle on how the marriage will impact your income tax situation. If you marry on or before Dec. 31, the IRS considers you to be married for the entire year and you can no longer file as a single taxpayer.

Your filing choices boil down to two: You can file jointly with your new spouse or you can opt to file as married filing separately. As the name implies, you and your spouse will file separate returns if you go the latter route. The choice depends on several factors, which is why you should start thinking about your options now and why consulting a tax professional is a good idea.

Filing jointly is simpler, since you only have to deal with one tax form and there’s no need to allocate income and deductions to a specific spouse. On the other hand, a joint return could push you into a higher tax bracket. You can compare tax brackets at websites such as Moneychimp.com. In addition, the so-called “marriage penalty” could adversely affect you if you file jointly. The closer your income is to your spouse’s income, the more likely that you’ll feel the marriage-penalty bite.

Filing separate returns also has drawbacks, however. If you would have been eligible for a child-care tax credit or a higher-education credit if you filed jointly, you’d lose out on those tax breaks if you file separate returns.

Another potential downside to a joint return is the so-called joint-and-several liability issue. If your spouse commits errors or omissions on your joint return, either deliberately or by accident, you’re on the hook for back taxes, interest, and penalties if the IRS decides that you’re an easier target for collection. If you have serious doubts about your spouse’s tax filing skills, you may be better off filing separately, even if it results in a higher tax bill.