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Married, and Checking for Withholding

Feb 2nd 2018
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Our long-time tax contributor Julian Block regularly receives commentary about his posts, as well as a multitude of emails from other practitioners. Here he has compiled a list of Q&As around many of the latest tax-related issues from other practitioners and business owners. 

We hope you find it informative and, as ever, feel free to add your own comments and questions to this as well. These questions have been edited and condensed for clarity and brevity.

Question. The main income sources for my husband and me are our salaries. I just began a new job that pays a good deal more. How does that affect our taxes?

Answer. Couples need to check withholding from their paychecks when a wife (or husband) starts to receive more income. Many couples belatedly discover at filing time that the federal tax rate for the first dollar of her earnings is the rate for the last dollar of his earnings. Thus, if your husband falls into a 30 percent federal and state bracket, so do you.  

To avoid an expensive surprise, you and your husband should make sure that sufficient taxes are withheld to cover the tab for your combined incomes. Both of you may need to file new W-4 forms with your employers.

Even when salaries stay the same, you should regularly review the number of withholding exemptions you claim in light of changing circumstances that can generate big year-to-year changes in your tax liability — for instance, marriage, divorce, birth of a child, purchase of a home and gains or losses from investments.  

Q. Our divorce didn’t become final until Dec. of last year. Can we still file jointly?

A. No. IRS rules bar you from filing jointly unless you were married as of Dec. 31.

Q. My wife absolutely refuses to sign our joint income tax return, just because our marriage may be going down the tubes. What can I do?  

A. Nothing. A joint return must be signed by both spouses, even if only one had income. Since your wife is unwilling to sign, you must each file a separate return if either had income of more than a specified amount (the same as the amount of your personal exemption). The amount is indexed, meaning it’s revised yearly to reflect inflation — $4,050 for 2017.

Q. It pays for me to file jointly. But I don’t want to reveal my income to my wife. Suppose I have her sign a blank return and then fill in the figures?

A. Don’t bother. She’s entitled to a copy of the return from the IRS.  

Q. To save on my taxes, I plan to file separately and claim all of our itemized deductions. Can my husband file using the standard deduction available to someone who doesn’t itemize?    

A. The IRS figured out what to do about that a long time ago. Both spouses must use the same method of handling deductions. If you itemize, so must he.    

Q. Because of marital problems, my husband and I filed separate returns for 2015. Now that we’ve reconciled, can we switch to a joint return for that year?

A. Yes, provided you do so by filing an amended return within three years from the filing deadline (not including any extensions) for your return. Do the recalculation on IRS Form 1040X (Amended U.S. Individual Income Tax Return), available at irs.gov.

Remember that changing a federal return might also require amending a state return. In that event, file your state’s version of the Form 1040X.  

You can’t do the reverse — that is, if you file jointly, you can’t switch to separate returns once the filing deadline of April 15 (for most persons) has passed. That election is binding on you. 

Additional articles. A reminder for accountants who would welcome advice on how to alert clients to tactics that trim taxes for this year and even give a head start for next year: Delve into the archive of my articles (more than 225 and counting). 

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