Month: July 2024

Summer wedding season has arrived, and newlyweds can make their tax filing easier by doing a few things now. Your marital status as of December 31 determines your tax filing options for the entire year, but that’s not all newlyweds need to know.

Report a name change

If you or your spouse are changing a name, be sure report the change to the Social Security Administration. The name on your tax return must match what’s on file at the SSA. If it doesn’t, it could delay any tax refund. To update information, you should file Form SS-5, Application for a Social Security Card. It’s available on SSA.gov, by phone at 800-772-1213, or at a local SSA office.

Update address

Notify the United States Postal Service, employers and the IRS of any address change. To officially change your mailing address with the IRS, you must compete and submit Form 8822, Change of Address.

Check withholding

Newly married couples must give their employers a new Form W-4, Employee’s Withholding Certificate, within 10 days. If both you and your spouse work, you may move into a higher tax bracket or be affected by the additional Medicare tax.

Review filing status

Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly is usually more beneficial, it’s best to figure the tax both ways to find out which makes the most sense. Remember that if you are married as of December 31, the law says that you are married for the whole year for tax purposes.

Beware of scams

Everyone should be aware of and avoid tax scams, but that goes double for newlyweds. The IRS will never contact a taxpayer using email, phone calls, social media or text messages. First contact generally comes in the mail. To find out if you owe money to the IRS, taxpayers can view their tax account. If you still have questions, contact our office and we would be happy to help.

It seems like “side hustles” are all the rage these days. But come tax day, the tax treatment of these endeavors can be a big question mark — especially since these often aren’t the primary source of income for those who take part in them.

Hobbies and businesses are treated differently when it comes to filing taxes. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation.

Whether you are having fun with a hobby or running a business, if you are paid through payment apps for goods and services during the year, you may receive an IRS Form 1099-K for those transactions. These payments are taxable income and must be reported on federal tax returns.

There are a few other things you should consider when deciding whether your project is a hobby or business. No single thing is the deciding factor. All factors need to be taken into consideration and weighed when deciding if your project is a hobby or business.

How to decide if it’s a hobby or business

These questions can help you decide whether you have a hobby or business:

• Does the time and effort you put into the activity show that you intend to make a profit?
• Does the activity make a profit in some years, and if so, how much profit does it make?
• Can you expect to make a future profit from the appreciation of the assets used in the activity?
• Do you depend on income from the activity for your livelihood?
• Are any losses due to circumstances beyond your control or are the losses normal for the startup phase of your type of business?
• Do you change your methods of operation to improve profitability?
• Do you carry out the activity in a businesslike manner and keep complete and accurate books and records?
• Do your and your advisors have the knowledge needed to carry out the activity as a successful business?

Whether you have a hobby or run a business, good recordkeeping throughout the year will help when you file taxes. If you need any help determining whether your project is a hobby or a business, please contact our office. We would be happy to help.