For Newlyweds, Arguments For and Against Filing Taxes Jointly
"Usually when you're filing a joint return, what you're saying when you sign that return is that it's a true, accurate return," Criscuolo says. "In some situations, a spouse isn't auditing their other spouse and making sure everything is claimed and reported properly."
White says he has encountered married clients who will cover up the numbers on the couple's tax return and simply ask their spouse to sign it. Not only should a spouse never do such a thing, but they should file separately without hesitation.
"The biggest reason that I know of that people file separately is distrust: If you expect dishonesty or that someone is overstating deductions, understating income or you think there are hidden assets, then you don't want to put your name on a tax return with somebody else," White says. "I have clients that file separately for that very reason, and there's an 'innocent spouse' law to help protect you, but that's a little bit like going to traffic court to prove you're innocent after you've been given a ticket. It's better not to get the ticket in the first place."
So how do you know for sure which filing method will work best for you? Folks who file their own taxes are going to want to use some tax preparation software to compute their return for joint and separate filing and compare the results. If tax returns are prepared for a couple by a third party, this will usually happen automatically.
Before that happens, however, a couple will want to make sure all financial information is in order before facing the IRS unprepared. White recommends doing a dry run on a tax return early in the year just to make sure the withholding on a couple's combined income is sufficient to make up for the hike in earnings since they were single.If a couple is filing electronically, a spouse changing his or her name will want to notify Social Security immediately to ensure that all the information matches up. If there are children coming into the family whose names are changing as a result, their Social Security information will have to change, too. Form SS-5 is an easy way to make the switch. If a couple is moving after the wedding day, they'll want to cozy up to form 8822 as the best way of keeping the IRS apprised of the change. Jason Notte. >To follow the writer on Twitter, go to http://twitter.com/notteham.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV