2014 Tax Question

[chikastuff]

So DH (WOOT!) and I just got married last week and I have a few tax questions.

1. Do we need to change our status to married or can we continue to withhold at the single rate and then just file married when we do our taxes?

2. I get to claim my son in 2014 (I get even years, xh gets odd) as well as HOH every year. I imagine the HOH changes to DH now that we're married, as he makes way more than I do. He should change his withholding to account for HOH, correct?

3. Should I change my withholdings to account for claiming my son this year or should DH do that? Not sure how it works since I'm the actual guardian...

Thanks in advance!!

[sicilygirl]

You and your husband will file as married filing jointly (or separately, if you choose), not Head of Household.  Your son can be claimed as a dependent this year.  Use the IRS's withholding calculator to determine what you and your husband should each have withheld this year (it will tell you how to fill out your W-4s).

www.irs.gov/Individuals/IRS-Withholding-Calculator

[chikastuff]

Why not HOH?

[illgetthere]

HOH is only for those that are unmarried, typically single parents. You can choose to withhold at the single rate, but you get get more of a refund. It is not the way people would recommend, but it is legal.



EDIT:
What Qualifies a Taxpayer for the Head of Household Filing Status?

A person can claim the Head of Household filing status on their tax return if the person passes three tests: Unmarried Test, Support Test, and Qualifying Person Test. A person filing for head of household is unmarried or considered unmarried at the end of the year, and paid more than half the cost of maintaining a home for the year, and has one or more qualifying persons who reside with the taxpayer for more than half the year.

Unmarried Test

To qualify for head of household status, a person must be unmarried or considered as if they were unmarried for the year.

Normally, a taxpayer must be unmarried on the last day of the year in order to file as head of household. Unmarried means a person is not married because he or she is single, divorced, or legally separated under a separate maintenance decree. As general rule, state law determines whether a person is married or not married.

In the case of same-sex married couples, their marriages are recognized for federal tax purposes based on the state or country where the marriage was celebrated. The laws of the state where the same-sex married couple resides determines whether the couple is considered married or not married for the purpose of filing their state income tax return.

Married Persons may be Considered Unmarried for Tax Filing Purposes

A married person may be considered as if he or she were unmarried for the purpose of qualifying for head of household status. To be considered unmarried, the person needs to be legally married and have lived in a separate residence from his or her spouse for at least the last six months of the year (July through December). Furthermore, the taxpayer would need to file a tax return separate from his or her spouse, and needs to meet the other two criteria for head of household relating to the Support Test and the Qualifying Person Test.

In other words, the married person would need to (1) reside someplace separate from the other spouse for at least the last six months of the year, and (2) pay for more than half the cost of maintaining their home, and (3) have one or more qualifying persons living with them at their separate home for more than half the year. The advantages of being able to file as head of household for married persons are discussed further in the article.

Support Test

To qualify for head of household status, the taxpayer needs to pass a “Support Test.” The support test means that the taxpayer provides more than half the cost of keeping up a home for the year.

The cost of keeping up a home includes such expenses as rent, mortgage payments, property taxes, property insurance, repairs, utilities, and groceries. Taxpayers can use Worksheet 1 in Publication 501 to determine if they meet the support test. Costs not included in the support test are clothing, education, medical care, vacations, life insurance and transportation.

Money received from public assistance programs such as Temporary Assistance for Needy Families does not count as financial support provided by the taxpayer. In Publication 17, the IRS advises: "If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost."

Qualifying Person Test

To qualify for the head of household filing status, a qualifying person needs to live in the taxpayer's home for more than half the year. Only certain types of closely-related relatives can be qualifying persons for the head of household filing status. A qualifying person is:
•Child, step child, adopted child, foster child, brother or sister, or a descendant of one of these whom you claim as a dependent under the qualifying children rules;
•Child, step child, adopted child, foster child, brother or sister, or a descendant of one of these whom you would be eligible to claim as a dependent under the qualifying children rules but choose not to claim as a dependent because you released the dependent's exemption to the noncustodial parent;
•Mother or father who can be claimed as a dependent under the qualifying relative rules; or
•Brother, sister, grandparent, niece, or nephew whom you can claim as a dependent under the qualifying relative rules.

Refer to Table 4 in Publication 501 for a well-laid out chart regarding qualifying persons.

Note that under the qualifying relative rules, some dependents do not need to live with the taxpayer. However, for head of household purposes the dependent must reside with the taxpayer for more than half the year.

Two Exceptions on the Requirement that a Qualifying Person Must Reside with the Taxpayer for More than Half a Year

Exception for Temporary Absences

During a period of temporary absence, on the part of either the taxpayer or dependent, due to "illness, education, business, vacation, or military service," the taxpayer and the qualifying person are still considered to be residing in the same household. To count as a temporary absence, "It must be reasonable to assume the absent person will return to the home after the temporary absence. You must continue to keep up the home during the absence" (Publication 501).

Exception for Dependent Parents

There is a special exception for tax payers who support dependent parents. A parent can be a qualifying person for the purpose of qualifying for head of household status even if the parent does not reside at the same home as the taxpayer. However, the taxpayer still needs to be able to claim the parent as a dependent and would still need to meet the support test. "If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. However, you must be able to claim an exemption for your father or mother. Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly" (Publication 501).

[jenjen]

Ok I read this a few times to try and comprehend. Hope this makes sense.

1) it doesn't matter what your payroll is withheld at. If you both claim single (or married but withhold at a single rate), more will be taken out. How much more? No clue. I would recommend both of you DON'T change your w4's to married, that usually under withholds taxes,

2)you no longer get HOH. You and your now H are married. So you are married filing joint or married filing separate when you file your 2014 taxes. There is no HOH anymore for you. If you feel one of you should change your withholdings, you can do that. A lot of people suggest the IRS website for help.
3) as long as you and your h are doing married filing joint, it doesn't really matter who the guardian is. Back on #1 and 2, no one here can tell you what you should have withheld as there are 1 million variables for every tax situation. If you need help, I would refer to the IRS site or to get a CPA to help for your situation.

[chikastuff]

NM I read the blurb on the website you posted. Okay, so we should withhold at the married level (why not the single)? And I claim my son as an exemption on my W-4?

[chikastuff]

Thanks!

[sicilygirl]

Feb 26, 2014 14:20:41 GMT -5 chikastuff said:

NM I read the blurb on the website you posted. Okay, so we should withhold at the married level (why not the single)? And I claim my son as an exemption on my W-4?

You should use the calculator I linked to above to figure out how much to withhold.  It's impossible for us to tell you what your withholdings should be without knowing your entire financial picture.  Using the married rates means that less will be withheld than if you use the single rates, but the calculator will tell you what you should do.  It's very easy to use.

And yes, you are not eligible to file as Head of Household now that you are married.

[aurora]

Congratulations on getting married!

I agree with everyone else that it's impossible for us to tell you exactly what to withhold because there are too many complicating factors. If you both claim single, you're likely to withhold too much (still not guaranteed). If you both claim married, you run the risk of withholding too little. Claiming your son will reduce the amount withheld, as well. But, it's hard to say what is "right."

[chikastuff]

So calculator aside, in the meantime it's OK to not withhold for my son and to continue at the single rate and just adjust at tax time?

[stategirl08]

Both of you withholding at the single rate and not adjusting for your son will just mean they withhold more and may put you in a refund situation at the end of the year.

Bottom line, you're fine where you are. If you want to make changes, see the calculator linked above or meet with a CPA.

[monsterz]

H and I still withhold at the single level and we broke even last year and will owe a little bit this year.

[chikastuff]

^this is my concern. DH owns a business and adjusts his salary/bonuses based on how business is doing. Sometimes he pays himself $1k/week, sometimes it's $2k/week. My salary is set, but my bonus is variable and could range anywhere from $6k-$18k. It's hard to figure out even using the calculator.

[WinterWine]

Feb 26, 2014 14:54:48 GMT -5 monsterz said:

H and I still withhold at the single level and we broke even last year and will owe a little bit this year.

We did the same this year as well and I am glad we did. If we had changed to both withholding as married we would have owed a lot. If you both earn similar incomes and are concerned about owing, continue to withhold as single may be a good solution. 

[flatlan]

Feb 26, 2014 14:58:52 GMT -5 chikastuff said:

^this is my concern. DH owns a business and adjusts his salary/bonuses based on how business is doing. Sometimes he pays himself $1k/week, sometimes it's $2k/week. My salary is set, but my bonus is variable and could range anywhere from $6k-$18k. It's hard to figure out even using the calculator.

DH and I both have regular income on a W-2 and I have an independent contract side business that I pay self employment tax on.  DH and I both with hold as single at our regular jobs to have more taxes held out throughout the year to try to off set what we will owe on the self employment.  We still owe every year but the single rate of with holding does help. 

You will not get in trouble for continuing to with hold as single. 

[Deleted]

Be careful changing your filing status. The first year H and I were married we both changed out filing status to married. It under withheld and we ended up owing about $2000, being young and broke, that nearly killed us. Now, H withholds as married and I do single. We get a small refund at the end of the year.