WHAT HAPPENS AFTER YOU SAY “I DO”
Texas CPAs Explain the Tax Effects of Getting Married

DALLAS — The dress was beautiful, the flowers perfect and the reception second to none. You’re back from the honeymoon with thank-you notes more likely on your mind than taxes. While thanking your great-aunt Helen for the toaster is important, CPAs say you should move tax planning higher on your to-do list to ensure that filing your first tax return as husband and wife goes as smoothly as possible.

1. UPDATE RECORDS
A woman who takes her husband’s surname upon marriage should notify the Social Security Administration and her employer of the change. This helps to ensure that earnings are properly reported and credited. To get a Social Security card printed with your new name, complete Form SS-5, Application for a Social Security Card. The application is available on the SSA website at www.ssa.gov or by calling 1-800-772-1213.

When your marriage involves a move, you should complete IRS Form 8822, Change of Address. You can find this form on the IRS website at www.irs.gov, or you can request a copy by calling 1-800-829-3676. Be sure to notify the U.S. Postal Service as well.

Newlyweds should also submit new W-4 forms with their employers to ensure that withholding from their paychecks reflects their new marital status.

2. FILING STATUS
Whether you got married on Jan. 1, Dec. 31, or anytime in between, as far as the IRS is concerned, you’ve been married all year and must file as a married taxpayer. You need to consider whether filing jointly or separately is better for your personal financial situation.

3. FILING OPTIONS
Choosing the best filing status is a major tax decision for newlyweds. When you file jointly, you combine your income, deductions, and credits, all on one income tax form. Generally – but not always – filing a joint return results in the lowest tax bill. Keep in mind that when you file a joint return, each spouse is personally liable for everything on the return.

Filing separately may be a better choice if one spouse has high medical expenses or miscellaneous itemized deductions. Since in both cases you can only deduct expenses in excess of a specific threshold (7.5% of adjusted gross income for medical expenses and 2% for miscellaneous deductions), your combined income on a joint return could make it more difficult to qualify.

On the other hand, keep in mind that some tax credits and deductions are reduced or eliminated for married couples filing separately. For example, separate filers can’t take advantage of education tax credits or deduct student loan interest. Figuring your taxes both ways is the best way to determine which filing status results in the lowest tax bill.

4. TAX BRACKETS
Be prepared. If you’re married and plan to file jointly, it’s possible that you will be in a higher tax bracket based on you and your spouse’s combined income. For a married couple filing jointly in 2006, the rate on taxable income between $61,300 and $123,700 is 25 percent.

5. IRA DEDUCTIONS
A newly married taxpayer who was able to deduct IRA contributions as a single filer may find that he/she no longer qualifies. If your new spouse is covered by a retirement plan at work, you may be entitled to only a partial deduction or no deduction at all.

Your ability to claim a deduction is determined by your filing status, your combined adjusted gross income, and whether or not your spouse is covered by a qualified employer plan.

CPA ADVICE
Keep in mind that as you face new financial and tax challenges together as a married couple, a CPA can help you prepare for a lifetime of effective tax planning. Make an appointment now while you have time to implement tax-saving strategies for 2006.

PERSONAL FINANCE INFORMATION
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ABOUT TSCPA
TSCPA (http://www.tscpa.org) is a nonprofit, voluntary, professional organization representing Texas CPAs. The society has 20 local chapters statewide and has 27,000 members, one of the largest in-state memberships of any state CPA society in the United States. TSCPA is committed to serving the public interest with programs that advance the highest standards of ethics and practice within the CPA profession.