Tax return advice

March 1, 2009 7:18:15 AM PST
It's just a month-and-a-half until the big day, Tax Day, April 15th. Ginger Broderick, President of Broderick and Company CPAs joined us with advice for filing your tax return. A common question discussed with soon to be married or recently married couples relates to the status filing of their tax returns. It is difficult to give advice without meeting with the couple and discussing various issues.

What is the age of the couple?
If the couple is under 35 years, little or no assets and employed, then generally, the couple can file as a joint return. However, many couples divorce within five years of marriage, so I generally recommend that the MFS is the best decision for the first few years. Within three years, the couple is generally moving closer together or farther apart. There may be children or a purchase of a home that indicates the marriage will continue for at least the next few years.

One woman married her husband and filed a joint tax return during the first year of marriage. After the filing of the joint return, the couple received tax notices that the husband had not filed tax returns for six years. He had freelance/self-employment income and never paid any estimated taxes during that time. Upon the filing of the returns, there was over $50,000 of taxes, interest, and penalties assessed on the account. The liability is considered marital debt and the wife is now responsible for paying the debt if the husband does not. The reason? The debt occurred during the term of the marriage. This money problem led to a divorce and the wife became responsible for the splitting of the debt. Her liability was over $25,000!

Therefore, in most cases, it is best to file MFS returns for the first few years of marriage.

Do we file joint or a MFS tax return?
Determining facts:
Age of couple.
Value of assets belonging to each spouse.
Any prior or potential debt that may be attached to each spouse. Average individual has over $20,000 of credit card debt. Bad Credit? Tax Liens?
Does one spouse own a business? Business liabilities may affect the innocent spouse and may make him/her personally responsible.
Review all financial responsibilities and money personalities of the couple.
Discuss financial planning issues before marriage. If not, financial troubles may develop early in time.


NEW YORK AND TRI-STATE AREA NEWS

USEFUL LINKS:
MORE WEEKEND || REPORT TYPO ||  GET WIDGET

 EYEWITNESS TWITTER ||  FIND US ON FACEBOOK


Load Comments