PARSIPPANY, N.J., Feb. 12, 2013 /PRNewswire/ -- According to the National Center for Health Statistics, over two million weddings take place each year and, while newlyweds are often excited about doing many things as an official couple for the first time, filing a tax return usually isn't one of them. But because of the number of new considerations that result from tying the knot - and because some may be popping the question this coming Valentine's Day - national tax preparation firm Jackson Hewitt Tax Service® reminds 2012 brides and grooms to learn about which options are still relevant from their single days and which count as "something new" when it comes to filing.
"Getting married is one of the most well-known life changes triggering tax benefits," explained Mark Steber, Chief Tax Officer, Jackson Hewitt Tax Service Inc. "Yet, because taxpayers are now filing as a married couple, it is important to know how their new status impacts a return; and when it may be beneficial to continue filing separately."
Steber shares key areas for those who wed in 2012 to consider when filing:
- Something Old- Existing tax considerations:
- Bachelor/Bachelorette pads: If both taxpayers own their own homes already, there is an option to rent one of the houses or apartments and live in the other. Rental income is not the only thing to be claimed on a tax return. Rental expenses such as mortgage interest, real estate taxes, homeowners' insurance, homeowners' association dues, legal fees, repairs, maintenance, and depreciation expenses on the home are also potential deductions.
- Children: If one spouse already has a child, or children, they become children of both spouses for tax purposes. Any child-related expenses that are paid by either taxpayer are now considered to be provided by both taxpayers when determining proof of support.
- Something New - New tax options for recently married couples:
- Legal name: For women, tying the knot often results in a new last name. Be sure the names listed on your tax return match all forms of identification, including a Social Security card, passport, driver's license, and documents from employers, loan holders, and investment accounts. In order to protect your personal information, all identification should match the Social Security Administration database. Tax returns will likely be delayed if all records do not match.
- Filing status option: Married taxpayers can choose to file jointly or separately based on their individual situation. Generally, using the 'Married Filing Jointly' status provides the lowest tax liability and the highest standard deduction. However, if one of the filers has large deductions or expenses, the 'married filing separately' status may be more beneficial. Remember that certain credits, including the credit for Child and Dependent Care Expenses, the Earned Income Tax Credit, and the Education credits, are not available under the 'Married Filing Separately' status.
- New home: Taxpayers are eligible for an exclusion from income of up to $250,000 on the gain when they sell a house. The taxpayer must live in the house for two of the five years preceding the sale and must use the house as the main home for two of the preceding five years. Married taxpayers who both meet the ownership and use test may exclude up to $500,000. If both of the taxpayers own a home before they get married and sell one of them, the maximum allowed exclusion is generally $250,000 unless they each meet the ownership and use rules for the home sold. If only one meets the rules, they can exclude the gain on a joint return or a separate return.
- Something borrowed:
- Student loan interest: If you are still paying off those pesky student loans, the maximum income level for married filing jointly taxpayers is twice the amount it is for single taxpayers - $150,000. But remember, your taxable income has likely increased if you are now filing a joint return. You can deduct student loan interest for you or for your new partner, provided that eligibility rules were met, but know that if you choose to file as 'married filing separately' you cannot deduct student loan interest on a tax return.
Steber also notes that there are tax implications for couples who parted ways in 2012. "If you and your spouse were divorced in 2012, your filing status probably changed, which may mean a decrease in taxes," he said. "If alimony is a factor, keep in mind that it is tax-deductible for the person who is paying it and must be noted as taxable income for the person who is receiving the funds."
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an industry-leading provider of full service individual federal and state income tax preparation, with 6,800 franchised and company-owned locations throughout the United States, including 2,800 located in Walmart stores nationwide, and more than 400 Sears stores in the United States and Puerto Rico for the 2013 tax season. Jackson Hewitt Tax Service® also offers an online tax preparation product at www.JacksonHewittOnline.com. For more information, or to locate your neighborhood Jackson Hewitt® office, visit www.JacksonHewitt.com or call 1-800-234-1040. Jackson Hewitt can also be found on Facebook and Twitter, or check out Jackson Hewitt's "On the Street" video series, hosted by Chief Tax Officer Mark Steber and available on YouTube at http://www.youtube.com/jacksonhewitt.
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SOURCE Jackson Hewitt Tax Service Inc.