More On Tax Planningfrom The Advisor's Professional Library
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- Annuities: Variable Annuities Annuities are hot. The tax rules vary with the circumstances. Advisors must be aware of these intricacies when discussing annuities with clients.
If you or a client has just gotten married or divorced, the last thing you want is for something to further complicate tax returns–or throw a snag into the processing of a refund.
Name changes can do just that, whether it’s a matter of taking a new name or resuming an old one. Connubial bliss can suffer if the refund doesn’t arrive in time to pay some of those hefty wedding bills–and freedom might not seem so free if finances are impaired when a long-anticipated refund check fails to show up. So here are five suggestions from the IRS that can help you stay out of trouble, whether you’re once again flying solo or have just tied the knot.
1. Calling a Spouse a Spouse
So you’ve taken the plunge and jumped the broom. The IRS’ computers won’t know, or care, unless you let the Social Security Administration know too–after all, a computer will look at your Social Security number and the name on your joint return and scream “Reject!”–even if you kept your old name and hyphenated it with that of your new spouse.
2. Back to the Future
Divorced? Same problem. If you went back to your old name, don’t forget to let SSA know so that the IRS computers don’t have a nervous breakdown trying to figure out where they know you from.
3. A Rose by Any Other Name
When you’re ready to notify Social Security, you will need to provide them with proof that you are (now) who you say you are. Make sure you have a recently issued document that identifies you as you wish to be known.
4. Gotta Do the Paperwork
Provide the Social Security Administration with that recently issued document, as well as a completed Form SS-5, Application for a Social Security Card, either by mail or in person at your local SSA office. The form is available online at http://www.socialsecurity.gov/, by phone–call 800-772-1213 to request it—or at those handy local offices. Your new card will arrive with your old number and your new name.
5. But What About the Kids?
Suppose you (or your spouse) adopted the kids, and their names changed too. Social Security needs to know about them as well, even if they don’t have SSNs yet. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number–or ATIN–by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. Form W-7A is available on the IRS.gov website or by calling 800-TAX-FORM (800-829-3676).
See AdvisorOne’s Special Report, 22 Days of Tax Planning Advice for 2012, throughout the month of March.
For more on the unique tax issues of women, please see Top Tips for Women at Tax Time.