What’s your marital status? Just beginning? Just recognized? Just ending? As your relationships change, so do certain federal tax rules governing your income tax return.
For example, your filing status depends on whether you’re considered married or unmarried on the last day of your tax year. Filing status is important because it plays a role in determining whether you need to file a return, as well as in the amount of your standard deduction and the income breakpoints for tax brackets.
As an illustration, say you’re legally married at the end of the year. If you’re eligible to file a joint return with your spouse, you can use the highest standard deduction amount ($12,400 for 2014), and you can earn up to $73,800 in 2014 while remaining in the 15% tax bracket.
Marital status is also a factor in gift tax planning. For instance, the annual gift tax exclusion for 2014 is $14,000. That’s how much you can give to anyone this year without having to pay gift tax. Married couples can double the exclusion by electing to “split” gifts.
Estate and retirement planning are affected by marital status as well. One example: When you’re a participant in a qualified plan such as a 401(k), your spouse generally must agree in writing if you want to designate someone else as your beneficiary. Are you recently divorced? You may still need the consent of your ex-spouse to change beneficiary forms.
According to the Internal Revenue Service, more than two hundred federal tax provisions and regulations reference marital status. If you have questions about which ones apply to you, please call us here at Dye and Whitcomb 970 207 9724 We’re here to keep you informed.