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Marriage and Taxes: Key Changes After Saying ‘I Do’
It may not be as fun to plan as the wedding venue, invitations and attire, but marriage can result in changes affecting essential tax issues that need prompt attention following the wedding:
Name. If your name has changed, report it to the Social Security Administration (SSA) so that the name on your Social Security card matches the name on your tax return. To make this change, file Form SS-5, “Application for a Social Security Card,” available from www.ssa.gov.
Tax withholding. Both spouses must furnish their employer(s) with new Forms W-4, “Employee’s Withholding Allowance Certificate.” This is because combined incomes may move taxpayers into a different bracket. Search www.irs.gov for the IRS Withholding Calculator tool to help you complete the new Form W-4.
Filing status. Marital status is determined as of December 31 each year. Spouses can choose to file jointly or separately each year. Contact the office and ask to have your tax liability calculated both ways.
Sending the Kids to Day Camp this Summer?
If your child is going to a summer day camp while you work, it may count as an expense toward the federal Child and Dependent Care Credit. For one qualifying child under age 13, you may annually use up to $3,000 of eligible child care expenses, including day camp expenses, to claim the credit for one child, or $6,000 for two or more children. Under current law, the credit ranges in value from 20% to 35% of the expenses up to those limits, depending on the taxpayer’s income.
Note, overnight camp costs don’t qualify for the credit and aren’t deductible. Contact the office with your questions.
Combine a Business Outing with Tax Breaks
Summer is here, and you may be planning a picnic or other outing for your employees. When doing so, keep tax deductions in mind. Most entertainment expenses aren’t deductible, and business meals are generally subject to a 50% deduction limit. But, you may be able to deduct 100% of employee party costs. The event must be for your entire staff and not be “lavish or extravagant.” Deductible costs include food, beverages, live music and venue rentals.
Detailed invoicing and recordkeeping are a must. Before sending out invitations, contact the office about maximizing your tax deduction.
