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Today let us learn “how getting married affects your taxes”. When you get married, your tax situation changes, either for better or for worse, and there are decisions to make regarding how the two of you should file. Here are the most important things to know.

First, married at year-end means married for the whole year. Your marital status on December 31 determines yyour tax filing options for the entire year. If you’re married at year-end, you have only two choices: [1] file jointly with your new spouse, or; [2] use married filing separate status for a separate return based on your income and your deductions and credits. Most married couples file jointly. It’s because it is simpler. You have to file only one form 1040, and you don’t have to worry about figuring out which income, deduction and tax credit  items belong to which spouse. Other things being equal, simple is good. Besides, it’s often cheaper too. That’s because using married-filing-separate status makes you ineligible for some potentially valuable tax breaks, such as the child-care credit and the two higher-education credits. Therefore, filing two separate returns often results in a bigger combined tax bill than filing one joint return.

Second, if you file jointly, you’re on the hook for your spouse’s tax misdeeds. Despite the preceding advantages, filing jointly is not a no-brainer for one big reason. For any year that you file a joint return, you’re generally jointly and severally liable for any federal income tax underpayments and penalties, caused by your new spouse’s unintentional tax errors or omissions or deliberate tax misdeeds. Joint and several liability means the IRS can come after you for tax underpayments and penalties, if collecting from your spouse proves to be difficult or impossible. They can even come after you long after you’ve become divorced. However, if you can prove you didn’t know anything about your spouse’s tax failings, had no reason to know and did not personally benefit, then you can try to claim an exemption from the joint-and-several-liability rule under the so-called innocent spouse provisions. This is easier said than done.

(continued to How Getting Married Affects Your Taxes (part 2))