What You Need To Know About Taxes If You're Getting Married

It may not be high on the list of wedding planning activities, but there are a few simple steps that can help keep tax issues from interrupting your newly wedded bliss. If you recently married, check out your new tax situation. You might save money or even prevent the problem of a missing refund check.The first things to handle are changes of name and address. Later, as tax season approaches, consider whether or not you'll itemize deductions, which tax return form is right for you and what filing status you'll use.

No one should delay the cake cutting or honeymoon because of taxes. But here are some helpful hints for later:

Use Your Correct Name
You must provide correct names and identification numbers to claim personal exemptions on your tax return. If you changed your name upon marrying, let the Social Security Administration know and update your Social Security card so the number matches your new name. Use Form SS-5, Application for a Social Security Card.

Change of Address
If you or your spouse has a new address, notify the U.S. Postal Service so that it will be able to forward any tax refunds or IRS correspondence. The Postal Service will also pass your new address on to IRS for updating. You may also notify to notify the IRS directly by filing Form 8822.

Refund Checks
Each year, the Postal Service returns thousands of tax refund checks as undeliverable, usually because the addressee has moved. Notifying both the Postal Service and the IRS of an address change in a timely manner can help ensure the proper delivery of any refund checks. To check the status of a tax refund, go to the IRS web site and use the "Where's My Refund?" service.

Changing Filing Status
Your marital status on December 31 determines whether you are considered married for that year. Married persons may file their federal income tax return either jointly or separately in any given year. Choosing the right filing status may save you money.

A joint return (Married Filing Jointly) allows spouses to combine their income and to deduct combined deductions and expenses on a single tax return. Both spouses must sign the return and both are held responsible for the contents.

With separate returns (Married Filing Separately), each spouse signs, files and is responsible for his or her own tax return. Each is taxed on his or her own income, and can take only his or her individual deductions and credits. If one spouse itemizes deductions, the other must also.

Which filing status should you select? It depends entirely on your specific situation. You should consider sitting down with a tax professional to make a determination.

IRS pushes back tax filing deadline

Taxpayers around the country will get an extra two days, until April 17, to file 2006 returns and pay taxes owed, the Internal Revenue Service said Wednesday.

The two-day reprieve comes about because April 15, the usual tax day, falls on a Sunday this year and April 16 is Emancipation Day, a legal holiday in the District of Columbia. The IRS said holidays observed in the nation's capital have an impact nationwide.

The tax agency had previously announced that residents of the District of Columbia and six eastern states would have an April 17 deadline because they are served by an IRS processing facility in Massachusetts, where Patriots Day will be observed on April 16.

The IRS said the April 17 deadline will apply to actions including:

_2006 federal individual income tax returns, whether filed electronically or on paper.
_Requests for an automatic six-month tax-filing extension.
_2006 balance due payments.
_Tax-year 2006 contributions to a Roth or traditional IRA.

Emancipation Day marks the April 16, 1862, signing by Abraham Lincoln of the Compensated Emancipation Act, which freed slaves in the District of Columbia. It is not a federal holiday, and IRS offices will be open.

In 2008 taxpayers will again face the usual April 15 deadline. The next year that Emancipation Day could affect filing deadlines is 2011.

The Annual Gift Tax Exclusion: Getting The Edge

Whether helping the kids with a down payment on their first home, paying the premiums on a life insurance policy in an irrevocable trust, or moving appreciated assets to a younger generation, annual gifting will touch the lives of millions of Americans. But before the transfer is made, an investor should spend some time looking at the investment and the tax ramifications of the property to be passed.

Much of the gifting itself will be done under the Annual Gift Tax Exclusion, a method that alleviates both a gift tax and the need to report the transfer. This exclusion applies to gifts only between individuals. Gifts made to charities and other organizations fall under a completely different set of rules.

The transfer is not deductible by the donor nor is it taxable to the recipient. Currently (in calendar year 2005), the annual exclusion is set at $11,000. In the future, this can be adjusted for inflation, but only in $1,000 increments. Spouses can increase their gifts to others to a maximum of $22,000 and, finally, gifts between spouses, like love, knows no limits.

Most transfers are done for one of two reasons. In the past, passing along property to diminish the value of an estate and, therefore, estate taxes was a major consideration in estate planning. This is still used extensively for larger estates but, under current law, fewer estates are subject to the tax. If the estate has no tax exposure (and if nursing care is taken care of), many advisors recommend not to gift at all but, instead, toallow the assets to receive a "stepped up" tax basis upon death.

Gifting to allow for current use of assets has been and continues to be popular. Often a parent wants to see a child use the gift immediately in order to enjoy an extended vacation or to make a major purchase. Here, it is expected that any gift of securities will be converted into cash with the appropriate tax paid.

Both donors and recipients should be aware that various gifts for educational or medical purposes may not reduce the annual exclusion. You should check with your tax advisor to determine whether this applies to a your specific situation.

Certain kinds of property (real estate, art, collectibles, closely held business interests, etc) should be appraised before a transfer is made. Consulting an expert in the particular field is usually a good idea to calculate the fair market value of the property.

Another circumstance requiring professional help is when "spending down" an estate for Medicaid purposes. An elder law attorney should be consulted for help in this area.

The actual gift of marketable securities or cash is fairly straightforward. Giving a check to someone or journaling over securities is enough to complete the gift. However, before making the gift, you should understand some of the potential tax considerations.

Let's first look at stock that has appreciated in value. Remember, whatever tax basis the donor in the gifted property will become the recipient's tax basis. If the donor is in a higher tax bracket than the recipient, it is often wise to gift the stock to the recipient and let the recipient sell the stock at his or her lower tax bracket.

If the fair market value of the stock is below the donor's original cost, then the donee must use the fair market value of the property as of the date of the gift in determining his or her tax basis. If you find yourself in this situation, the donor should consider selling the asset and then gifting the cash proceeds to the recipient.

Obviously, there will be times when a gift needs to be made regardless of the consequences; but, when time allows, you should do your homework to see what works to your best advantage.

Understanding Basic Tax Terms

If your like many, you don't always understand what people are talking about when it comes to Taxes. It's important to know the main tax terminology, especially when tax season comes around. Knowing the basics will make tax season less of a hassle for you, and maybe even save you some money. There are hundreds of terms; Below are some of the most important:

Tax Form
A Tax Form is the form that is filled out and submitted to your government to report all of your tax information for the past year.

Audit
An audit refers to an unbiased examination and evaluation of the financial statements of an individual or organization such as a business. Audit's are performed for the purpose of ensuring that accounting records are fair and consistent, and are following the guidelines laid out for the individual or organization.

Capital Gain
Capital Gain refers to the amount of money made on Capital during a given tax period. For example if you own a house, and over the past year the value of your house increased by twenty thousand dollars, you would have to claim this twenty thousand dollars as a capital gain in your income taxes.

Capital Loss
Capital Gain refers to the amount of money Lost on Capital during a given tax period. For example if you own a house, and over the past year the value of your house decreased by twenty thousand dollars, you would have to claim this twenty thousand dollars as a capital loss in your income taxes.

Child Tax Credit
Child tax credits are tax credits that are given to the caregivers for each dependent child, that at the end of the tax year is under 17.

Flat Tax
Flat tax refers to a system where everyone is taxed at the same rate, regardless of how much they earn.

Gross Income
Gross income is an individuals or corporations total income before any taxes or deductions have been applied to the sum.

Net Income
Net Income is the total amount of income after all deductions and expenses.

Property Tax
Property tax is a tax that is assessed on real estate value by a local government.