I had $3600 income last year, which is below the required amount to file a tax return. Half of that amount was contract work, since I don't have to file a return, do I have to pay social security tax?

Even though you were below the minimum required to file a tax return, your income subject to social security tax was greater than $400. Therefore, you must file a 1040 and Schedule SE to determine your tax liability for Social Security.

My spouse and I just got married this year, should we change our W4's from single status to married status? Right now we claim 0 single on our W4's.

You should change your W-4 going forward. You are probably aware from the media that there is a marriage penalty inherent in the federal tax system. Basically, a married couple will pay more tax than two single taxpayers with the same incomes.

Therefore, to minimize the impact of the marriage penalty on April 15th, you should change your W-4.

We were married in May of this year. Our filing status at work still says that we are single. How do we file?

As long as you were married on December 31st of the tax year, you are considered married for the entire year. Therefore, you will need to file as either Married Filing Jointly or Married Filing Separately.

In addition, to avoid the inherent marriage penalty in the tax system, you should consider changing your filing status on your W-4 that is filed with your employer.

What are the qualifications to file Married Filing Separately?

The only qualification to file as Married Filing Separately is that you are married at the end of the tax year (December 31).

I am on L & I permanent disability. I received about $300 from a money market fund account at my bank. Do I have to file on this and if so what forms?.

If you are single and under 65, you would have to have an annual income of more than $8,950 (not including any social security benefits).

If your are over 65, you could earn up to $10,300 before having to file.

When filing separately, should both spouses itemize? I thought the idea was to put all the itemization on the higher income return. Also, where should the exemption for the lower income spouse go?

On separate returns, both spouses must use the same method of deductions. If one spouse itemizes, both spouses must itemizes. If one takes the Standard deduction, both must take the standard deduction.

It can be a penalty for the spouse that doesn't get any deductions. It is purely a play on the progressive nature of the tax rates. Applying all of the deductions against at higher income with the maximum tax rate of 39.6% would more than pay for not getting any deductions applied against income of a spouse in the lowest tax rate of 15%. If you're both in the same rate, there shouldn't be any advantage.

Each spouse claims their own exemption.