Congratulations on your recent marriage! As you embark on this exciting journey together, it’s essential to understand how your new marital status affects your taxes. From name and address changes to withholdings and filing statuses, we’ve got you covered.
1. Change your name.
If you’ve decided to change your name after marriage, it’s crucial to update this information with the Social Security Administration (SSA) before filing your taxes. The name on your tax return must match the name on file with the SSA to avoid processing delays. Simply fill out Form SS-5 and submit it along with your original card. Once your name is updated, ensure all financial accounts and employer records reflect this change.
2. Change your address.
Moving in together often means a new address. Notify the IRS of your address change by submitting Form 8822. Also, update your address with your employer, bank, and any other relevant institutions to ensure you receive all important tax documents. Don’t forget to update your address with the United States Postal Service to forward any mail from your old address to your new one.
3. Update your withholdings.
Marriage can significantly impact your tax withholdings. To avoid underpaying or overpaying taxes, review and update your W-4 forms with your employers. The IRS provides a helpful Withholding Calculator on their website to guide you in determining the correct amount of tax to withhold from your paychecks. Updating your W-4 ensures that your withholdings reflect your new marital status and any changes in income.
4. Change your filing status.
One of the most significant decisions newly married couples face is choosing the right filing status. You have the option to file jointly or separately.
Filing Jointly vs. Separately
Simply put, couples filing separately prepare separate returns with individual deductions an income, whereas filing jointly means that both husband and wife file together and both are responsible for taxes owed.
Filing Jointly
Most couples benefit from filing jointly. This status often results in a lower tax rate, access to more tax credits, and higher income thresholds for various tax benefits. Joint filers can take advantage of the newlywed tax credit, which can lead to significant savings.
Filing Separately
There may be good reasons to file separately, though this option is less common. This option might be advantageous if one spouse has significant medical expenses, miscellaneous itemized deductions, or if there’s a large disparity in incomes. However, keep in mind that filing separately may disqualify you from certain credits and deductions, such as the Earned Income Tax Credit (EITC).
5. Assess the marriage “bonus” or “penalty.”
The “marriage bonus” is a colloquialism that refers to the potential tax benefits you may receive as a married couple. When you combine your incomes and file jointly, you might find yourselves in a lower tax bracket compared to filing as singles. This can result in substantial tax savings. Additionally, you may qualify for higher phase-out limits for deductions and credits, further enhancing your tax benefits.
On the other hand, the “marriage penalty” describes the rare situation in which couples pay more in taxes than they would filing single. The recent tax reforms have tried to reduce this likelihood.
6. Plan for the future.
Naturally, an important step is to notify your accountant ahead of time, so that she may help you form a plan for saving the most on your next return. Tax planning for newly married couples is a highly recommended final step for initiating your first tax year together.
More FAQs for Newlyweds about Taxes
Is a marriage license tax deductible?
Unfortunately, marriage licenses are not tax deductible. Marriage licenses and other wedding-related expenses are considered personal costs and are not deductible on your federal tax return.
What happens if one of us has significant tax debts?
If one spouse has existing tax debt, it can affect the other spouse when filing jointly. In such cases, you might consider filing an “Injured Spouse Allocation” (Form 8379) to potentially protect your share of the tax refund.
What if we marry in the middle of the year?
For tax purposes, your marital status on December 31st of the tax year determines your filing status for the entire year. This means that if you were married by the last day of the year, you can choose to file as married (either jointly or separately) for the whole year.
