Gabrielle M. Luoma, CPA, PLLC

Tax Tips for Newlyweds

Getting married involves hundreds of details and decisions, from wedding planning to house hunting to joint checking accounts. Although taxes may not be high on your priority list, it’s important to consider how you will file your annual returns as newlyweds. With tax season less than a year away, it’s a great time to look at some of the changes you may need to make for the IRS.
Here are some basic tips:
• Know Your Deductions: If you get married before December 31, you may file as a couple. The IRS allows for deductions from your income before determining the amount of taxes you’ll be required to pay. For non-itemized returns, there is a standard deduction of $5,700 for an individual, or $11,400 for a couple. Start by estimating your deductions; if you’re sure they will be more than the standard deduction, it’s in your best interests to itemize your return. Many newlyweds end up owing money the first year. To avoid this, you and/or your spouse may need to adjust your withholdings to prevent any unpleasant surprises in April. Contact your employer’s HR department to make any necessary changes on your IRS W-4 forms.
• Consider Your IRA Account: With Roth IRAs, there is an income limit for contributors. For singles, the limit is under $105,000 and the amount you can contribute disappears as your income reaches $120,000. For married couples, those thresholds are $166,000 and $176,000— less than double the individual threshold. If you’ve contributed this year, make sure you are still under the income allowed for couples.
• Don’t Forget Your Student Loans: Once you’re married, there are a few changes here, too. Even if you use the short 1040 form and don’t itemize, you are eligible for a student loan deduction. A single individual making under $60,000 a year is currently eligible to receive up to a $2,500 deduction against the interest paid on school loans. The deduction disappears as your income approaches $75,000. For married couples, those thresholds are doubled: a $120,000 combined income for the full $2,500 and $150,000 combined income at the deduction cap. On the downside, couples are not eligible for both of the $2,500 deductibles they may have been receiving as two single individuals. The IRS only allows for one of these $2,500 deductions per tax return.
As you begin your life together as newlyweds, be sure to all of the necessary changes in your financial lives as well. We’ve only covered a few of the most common considerations; as always, it’s best to check with a qualified tax consultant to discuss your specific circumstances.

Savvy business owners use a Certified Public Accountant to help with their taxes, knowing that training and experience can help to dramatically boost tax savings. But a good CPA is more than just a tax advisor—he or she is a business expert who can help with a range of financial and business development concerns. If you’re interested in learning more about the types of assistance a CPA can offer, consider these tips:

• Budgets and Business Planning: Whether you’ve just launched a new business or own an existing corporation, seeking the advice of an experienced CPA can be very helpful in establishing realistic budgets and benchmarks for your business. A strategic plan can make the difference between success and failure in today’s marketplace; a CPA can help you set business goals, establish checkpoints to measure progress, and take measures to encourage growth within your company.
• Assistance with Bonding: Bonding and taxes have different objectives, and a CPA can help you navigate the two areas to achieve the consistency that is favored by bonding agents, increasing your chances of a money-saving tax return.
• Profit and Cost Assessment: In order to understand and improve upon your current business structure, it’s necessary to monitor your systems and consider the costs and benefits of various types of work. A CPA can be helpful in analyzing the profits and costs of various contracts, products, and services you offer, and can give advice on which of these services are most lucrative and which are costing more labor and overhead than they’re worth. This kind of assessment can help you streamline your work to focus on your most productive areas.
• Internal Controls: These can encompass anything from elaborate checks and balances to discourage fraud, to a simple streamlining of your company’s paperwork to make you more efficient. A CPA with experience in your industry can advise you on the best internal controls for your business.
• Technology and Software Support: Your CPA can be an important resource in advising you on any changes you need to make to the technology or software you need to run your business. He or she can suggest software that can improve your financial outlook, and may be able to tell you about compatible technology in other areas.

A CPA is an invaluable team member for any business. Tap into their diverse range of skills to support your company’s growth, stability, and success.

As we approach the end of another calendar year, it can be tempting to clear out all those backlogged tax files and start fresh for 2010. But don’t start feeding all those old records to the shredder just yet—first, consider the following.

As a general rule, CPAs recommend hanging onto the past three years’ worth of tax records. That’s equivalent to the federal government’s statute of limitations for questioning or auditing your tax information. There are a few exceptions—some states have up to four years to examine your return, and the statute can be extended or removed in cases of fraud, significant income omission, or tax evasion. But taxpayers who have filed in a timely manner and paid any outstanding taxes by the due date can confidently purge any records three years after the date the return was filed.

It’s important to note that the three-year rule only applies to supporting documents and information related to your tax return. Other records, specifically those that detail capital assets, should be kept until the end of the statute period following their liquidation. Below are some examples:

• Tax returns: Although supporting documentation can usually be purged after the three-year mark, it’s wise to keep the actual returns themselves. These can prove invaluable in securing a loan or applying for insurance.
• Income and expenses: Hang onto any and all documents that verify your income for at least three years after you file. These include W-2s, 1099s, bank statements, and brokerage statements. Records of business-related expenses should also be kept.
• IRA contributions: Retain records of non-deductible contributions until the money is withdrawn, to avoid getting taxed twice on those funds.
• Stock information: Keep all records of stock ownership for at least four years after the sale of your shares. In the event of an audit, you’ll need these to verify any profit or loss resulting from the sale.
• Stock and mutual fund statements: Any stock dividends that are reinvested will reduce the amount of capital gain, thus lowering your taxable income. These statements should also be kept for at least four years after the sale, to provide a record of reinvested dividends.
• Home purchase and renovation receipts: If you’ve purchased a home or made significant improvements to a property you own, hang onto these records for at least four years after the sale of the property.

When in doubt as to whether to get rid of tax records, it’s best to give your CPA a call. He or she can help you determine the importance of the document and whether you’ll need to reference it down the road.