Choosing to get married should never entail any ambiguity about romance, but Enrolled Agent tax professionals might find that newlyweds are uncertain about the tax impact of their nuptials. Regardless of what date a wedding occurs, the couple is faced with only two tax reporting choices for the entire year. They are either married filing jointly or married filing separately.
Couples are normally encouraged to file jointly for several reasons learned during Enrolled Agent education courses. First, the tax rates for filing jointly are lower. In addition, many tax credits are disallowed when married filing separately. Plus, many tax deductions are eliminated or phased out at low income levels for separately filing married individuals.
However, under certain conditions, EA solutions for tax returns of married couples demand filing separately. This avoids creating a combined responsibility for taxes on a joint return. Either spouse is liable for tax when married filing jointly – even when only one spouse earned all the income.
Also, the IRS can withhold all of the refund on a joint return for the back taxes owed by one spouse before the marriage. Fortunately, Enrolled Agent training includes a lesson on using “injured spouse” relief to help one spouse recover a refund. This permits joint filing to claim tax credits that are not allowed for separately filing couples. An injured spouse must have refundable tax withholding from wages or claim a refundable tax credit on a joint return – such as the Earned Income Tax Credit or the Additional Child Tax Credit.
Of course, the injured spouse cannot have a legal obligation on the past-due tax debt of the other spouse. Enrolled Agents who know about the delinquent indebtedness of one spouse when preparing a joint tax return may complete Form 8379 for the injured spouse to send with the tax return. However, an injured spouse may send this form later, after receiving an IRS notice about offset of refund on the joint tax return. Special rules about division of income on Form 8379 apply to residents of community property states.
In general, the best way of assuring that spouses are responsible only for tax on their respective incomes is to file separately. An increasingly common example is a US taxpayer residing overseas with a spouse who is a foreign citizen. By filing separately, the income of the foreign spouse is not reported to the IRS. The US government only taxes income earned within the US or earned worldwide by US citizens.
Married couples can file a joint tax return even if one of the spouses has no income. This may allow a couple to enjoy more deductions and tax credits as well as a lower tax rate. Enrolled Agents are careful to caution that any unpaid tax on a joint return becomes a liability of the spouse who did not earn the income. When filing jointly is suitable and one spouse lacks a Social Security number, the lessons from an Enrolled Agent course about an Individual Taxpayer Identification Number (ITIN) becomes most important.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.