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Jackson Hewitt's Weekly 'Tax Time Tip': Newlywed or Newly-Single: How Relationship Changes Can Affect Your Tax Return
Jackson Hewitt Tax Service, a leader in the tax preparation industry, continues its weekly series, "Jackson Hewitt Tax Time Tips," with special tax considerations for those who had a change in their relationship status during 2006.
This Week's Tip: Whether recently married or happily uncommitted, relationships can be top of mind as Valentine's Day nears. There are several tax considerations to remember that are based on your relationship status in 2006.

  * If you walked down the aisle at any time last year, the government
    considers you to have been married for the entire year for tax purposes.
    Did you and your honey spontaneously tie the knot on December 31st, 2006
    at 11:59 p.m.? You are then considered married for the full year.
  * Despite this official status, you do have a choice of filing jointly or
    separately. "Filing a joint tax return as a married couple may give you
    the lowest tax liability and the highest standard deduction, but a tax
    preparer can evaluate your individual situation to help you make the
    best decision," explains Mark Steber, Vice President of Tax Resources,
    Jackson Hewitt Tax Service. "Couples who have incomes in the same range,
    for example, may be in a more favorable position by filing jointly."
  * On a joint return, the couple reports their combined income and
    allowable deductions. It is possible to file a joint return even if only
    one member of the couple had income during this period. Filing separate
    returns can be advantageous if you prefer to be responsible for your own
    tax liability.
  * Couples who married in 2006 may now be eligible for two notable tax
    breaks. For married couples filing jointly, the 15% tax rate bracket has
    been expanded to $61,300 -- up from $59,400 last year. "This means that
    a couple with a joint taxable income of $80,000 in 2006 will have a tax
    liability of $13,115, saving approximately $221 from the previous year,"
    explains Steber. Also, the standard deduction for married couples filing
    jointly has increased to $10,700 on one's 2006 tax return -- up from
    $10,000 deducted on last year's. This change will be most significant
    for couples that do not itemize their deductions.
  * Keep in mind that the 15% tax bracket for married taxpayers filing
    jointly was expanded to twice the income range as that of a taxpayer
    filing as single, helping to reduce the marriage penalty.  "With the
    extra tax savings this year for those 'married-filing joint' for the
    first time, buying a bigger box of chocolates or taking a more luxurious
    weekend getaway with your sweetheart just may be a little less taxing on
    the wallet!" notes Steber.
  * All paperwork must be updated with the legal name for each person,
    including any name change resulting from getting married (or divorced).
    It is important for the name listed with the Social Security
    Administration to match all forms of identification and documents from
    employers, loan holders, and investment accounts. If there is a
    discrepancy, the tax return will be rejected and filing will be delayed.

Taxpayers who separated or divorced in 2006 have tax considerations as well:

  * If you obtain an annulment that declares your marriage never existed,
    you are considered unmarried for this and any previous tax years. You
    must amend your tax returns for all the tax years not affected by the
    statue of limitations for filing a return (usually three years) to
    reflect this change in marital status.
  * If you are divorced or separated, you may be able to deduct the alimony
    or separate maintenance payments that you are required to make to your
    spouse or former spouse, or on behalf of that spouse. If you are the
    person receiving these payments from your spouse or former spouse,
    remember that they are taxable to you in the year received.
  * You may file as head of household if you were separated the entire last
    half of the year and you had a dependent child living with you.
  * Taxpayers filing under "married filing separately" status do not qualify
    for many tax benefits, such as the Earned Income Tax Credit and the
    Child and Dependent Care credit.  Filing this way may also place you in
    the highest possible tax bracket.  Speaking with a Jackson Hewitt tax
    preparer to determine options for filing is recommended to anyone who
    has questions about the best way to proceed.

For more information on this, please visit your local Jackson Hewitt Tax Service location or the Jackson Hewitt website at http://www.jacksonhewitt.com/ for information on filing status and other topics, such as "What to Bring to Your Tax Preparation Session" and "The Top 50 Most Overlooked Deductions."
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE:JTX) , with over 6,000 franchised and company-owned offices throughout the United States during the 2006 tax season, is an industry leader providing full service individual federal and state income tax preparation. Most offices are independently owned and operated. The Company is based in Parsippany, New Jersey. More information may be obtained at http://www.jacksonhewitt.com/. To locate the Jackson Hewitt Tax Service(R) office nearest to you, call 1-800-234-1040.
Source: Jackson Hewitt Tax Service Inc.
Web site: http://www.jacksonhewitt.com/

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