While you going through the excitement of a wedding, paying your taxes is probably not utmost on your mind. However, blending families can have an immediate effect on your taxes. Once the honeymoon is over, you'll soon have to decide whether you want your taxes withheld at a single or married rate -- and how many allowances you will claim.
Can I Get a Bigger Refund by Being Married?
You marital status doesn't dictate the amount of your tax refund. What does effect you refund is how much money is withheld from your paycheck in relation to your tax obligation. If you have the proper amount of taxes withheld from your paycheck, whether you are single or married, you shouldn't owe taxes at the end of the year -- and you should also receive a minimal refund. If you want to get a bigger refund, you can adjust your Form W-4 to indicate "Married, but withhold at the higher Single rate," or by requesting that you employer withhold an additional amount each paycheck.
Does Changing to "Married" Increase Payroll Tax Withholding?
Changing your marital status on your Form W-4 from single to married typically reduces the amount of taxes withheld from your paycheck. When you marry and blend families, you might also have to adjust the allowances on your Form W-4. For example, you have the option of claiming an additional allowance for your spouse, and one for each dependent child. Each allowance reduces the amount of money your employer withholds from your paycheck. Withholding the proper amount can get more complicated if both you and your spouse work, or if you hold a second job. If you don't withhold enough from your taxes, you might end up owing taxes at the end of the year. If you're in doubt, the IRS offers on online withholding calculator to help you determine the proper withholding amount.
What Is the Best Way to Claim Married With Dependents?
The simplest way to claim married with dependents is to use the "Married Filing Jointly" status. This filing status allows you to combine both your incomes and deductions on a single return. You can also include all your dependents on the return. The alternative would be to file using the "Married Filing Separately" status. In this case, each spouse files taxes using only his/her own income and deductions -- and each must pay his/her own taxes. Determining which spouse claims which dependents becomes more complex; you lose the ability to claim the earned income tax credit, the credit for child and dependent care expenses -- and the child tax credit is cut in half for each spouse. There might be reasons to file separate returns that outweigh those obstacles. Your best bet is to complete your returns using both filing statuses -- and submit the returns with the status that gives you the greatest benefits.
What Is the Maximum Tax Credit for Children?
If you have dependent children and earned income from wages, salaries, tips or and other taxable employee pay, or net earnings from self-employment you might be able to take advantage of both the earned income tax credit and the child tax credit -- at least through the 2012 tax year. Whether or not you are eligible for earned income tax credit -- and how much you can take -- is based on your adjusted gross income. The maximum credit you can take is $5,891 if you have three or more qualifying children, your income is $50,270 or less, and your status is Married Filing Jointly. With the child tax credit, it's possible that you can reduce your federal income tax by up to $1,000 for each qualifying child you have under the age of 17. However, the credit is limited if your modified adjusted gross income is greater than a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000.
Does Marriage Affect Child Support?
State law determines child support -- and state laws vary. Either parent can file for a modification of a child support order. In some cases, a court will modify a support order due to a change in household income, but it is case and state-dependent. It is also unlikely that a court would ever eliminate a child support order when a parent remarries. For federal income tax purposes, child support isn't tax-deductible for the parent who pays it -- and it isn't taxable income for the parent who receives it.
Does a Dependent Spending Account Affect Taxes?
A dependent spending account, commonly referred to as a dependent care flexible spending account, is a type of tax-advantaged account that you can use to pay for care for your child or a dependent adult so that you or your spouse can work, look for work or attend school full-time. You save money on taxes because the money you set aside in your flexible spending account is pre-tax money, so you don't pay federal income taxes, social security or FICA taxes on that amount. You should calculate your needs for the year before setting up a dependent spending account, as flexible spending accounts have a use-it-or-lose it provision. If you don't spend the money by the end of the year, you typically forfeit the balance in your account.
- IRS: Form W-4
- IRS: IRS Withholding Calculator
- IRS: Publication 501
- IRS: Preview of 2012 EITC Income Limits, Maximum Credit Amounts and Tax Law Updates
- Center on Budget and Policy Priorities: Policy Basics: The Child Tax Credit
- Women's Divorce: Child Support Questions Answers From The Expert
- State of Texas: Family Code
- IRS: Tax Information for Non-Custodial Parents
- Nolo: Child Support and Taxes
- Kiplinger: Flexible Spending Account vs. Dependent-Care Credithttps://www.fsafeds.com/fsafeds/SummaryOfBenefits.asp#DiffFSA
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.