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For those newly married , there are several tax considerations to keep in mind as you prepare to file your income tax return, including two new pro-taxpayer tax breaks.
* If you walked down the aisle prior to December 31st, the government
considers you married for the entire year for tax purposes, but you do
have a choice of filing jointly or separately. "In general, preparing a
return as a married couple filing jointly may give you the lowest tax
liability and the highest standard deduction, but to find the best
scenario, it's wise to calculate your return both ways and see which is
the most advantageous for you," explains Mark Steber, Vice President of
Tax Resources, Jackson Hewitt Tax Service. "For example, if both of your
incomes are about the same, you may pay less in taxes by filing jointly,
depending on the rest of your return."
* If you are married or tied the knot in 2005, there are two notable tax
breaks now available to you. For married couples filing jointly, the 15%
tax rate bracket has been expanded to $59,400 - up from $58,100 in 2004.
"This means that a couple with a joint taxable income of $80,000 this
year will have $13,336 in tax, saving $145 from the previous year,"
notes Steber. "Also, the standard deduction for married couples filing
jointly has increased to $10,000 in 2005, from $9,700 in 2004. This
change will be most significant for couples that do not itemize their
deductions."
* Keep in mind that the 15% tax bracket for married filing jointly filers
was expanded to twice the income range as that of a single filer,
reducing the marriage penalty.
* All paperwork needs to be updated with the legal name for each person,
including any name changes that arise from getting married (or
divorced). It is important for the name listed with the Social Security
Administration to match all forms of identification and paperwork from
employers, loan holders, and investment accounts. If there is a
discrepancy, the tax return will be rejected, delaying your filing and
any expected refund.
* On a joint return, the couple reports the combined income and takes
combined allowable deductions. It is possible to file a joint return
even if only one member of the couple had income during this period.
Filing separate returns can be advantageous if you prefer to be
responsible for your own tax liability.
For those who were separated during the entire last half of the tax year, filing as Head of Household may be an option. If you obtain an annulment that declares your marriage never existed, you are considered unmarried for this and any previous tax years. You must amend your tax returns for all the tax years not affected by the statue of limitations for filing a return (usually three years) to reflect this change in marital status.
For more information on this, we encourage you to visit your local Jackson Hewitt Tax Service location or the Jackson Hewitt website at http://www.jacksonhewitt.com/ for information on filing status and other topics, such as: "What to Bring to Your Tax Preparation Session" and "The Top 50 Most Overlooked Deductions."
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