The Engagement: Finances, Taxes & Debt, Be Smart

The Engagement Series is a series of blog posts written before I got married in a very private ceremony on December 13th. They are released daily until they are complete, I hope you enjoy.

December 5, 2012

As I embark on this new journey in my life I’ve been taking time to make sure all my i’s are dotted and my t’s are crossed. In doing so the issue of taxes and debts came into play. A few things I looked into were: income tax, income tax filing, previous debt responsibility, etc.

Today I thought I would share with you what I have come across in order to assist you when you are faced with this decision in the future.

Income Tax Filing: A lot of people hide their married status from the IRS, this is illegal. Once you become married you can no longer file “Head of Household”. Your options are “Married Filing Separately” or “Married Filing Jointly”. What a lot of women and/or men do not understand is that if your spouse is not working you can still file a joint return and you will get a larger deduction than you would if you filed Head of Household; right now the 2012 standard deduction for Married Filing Jointly is $11,900 and Married Filing Separately is $5,950. The deduction for filing Head of Household is $8,700.

The other thing people need to know is that you cannot claim a spouse as a dependent; spouses are not dependents. What would need to happen is, you would file jointly and then add your incomes, if you spouse has no income to add then you would only add your own, what this means is you’ve paid even more in taxes than you should have and you get even more back. In my case both my future hubby and I both have incomes so both of our incomes will be added together on next year’s taxes.

Previous Debt Responsibility: You are not responsible for your future spouse’s debts unless you choose to apply for a loan together. But your spouse’s debts can prevent the both of you from getting loans in the future if you try to get a loan together even if you have spotless credit.

That leads me to Income Tax Garnishment: When you file your taxes and your spouse owes an entity like child support, your spouse’s portion of the tax return can be taken by the IRS. However, this is not supposed to affect your portion of the return. If the IRS does end up garnishing your portion of the return there is a process to ensure your return is returned to you. You must file an Injured Spouse Allocation Form 8379, to get your money back, this process may take a few weeks before you get your money but you will get it. You can also apply for Innocent Spouse Relief; Innocent Spouse Relief provides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.

In order to file for any of the above you must first file a joint return with your spouse.

I found a little info that may be beneficial for you. Check out: 7 Tax Tips for Recently Married Taxpayers

Remember, always be prepared for what is to come. There’s nothing wrong with taking risks and chances, just make sure they are calculated risks and know what it is you are getting into, even when following your heart.

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