As you settle into your new life as a married couple, consider these Newlywed Tax Tips. Marriage impacts your taxes, so be ready for April 15th. Immediate changes aid in a less stressful tax season.
- The biggest change is your marital status. Transitioning from a single or head-of-household status impacts your previous exemptions and deductions. For instance, if you were previously head of household, you will lose the extra exemption you received prior to marriage. Instead, you shift to Married Filing Jointly, which combines your incomes and possibly bumps you into the next tax bracket. This means more taxes are withheld. Being aware of these changes once you exchange vows means the difference of paying more at the end of the year or balancing out before December 31st.
- Make sure you update your address and name properly with the Social Security Administration office. The IRS identifies you with your name and social security number. If they do not match, you will have a difficult time filing your tax return without it being rejected.
- If you and your spouse are employed, it is important to review the withholdings from your paychecks. As I stated before, your combined incomes may bump you into the next tax bracket. This means you may need to increase your withholdings to decrease the amount you owe on April 15th.
- Itemized deductions may not have been available when you were filing separately, but now it could be an option. Being able to itemize instead of using the standard deduction may mean a large tax savings. Learning whether or not itemizing is an option allows you to plan for tax time more effectively by keeping track of new allowable deductions.
- The IRS declares if you are married on December 31st, your marital status is married for the entire year. Make sure you review whether filing Married Filing Jointly or Separately is the most advantageous way to file your tax return. Often, filing jointly is the most beneficial option, but filing separately is more favorable in certain cases.
There are many things to consider when you get married regarding taxation. Take the time and make the right adjustments so you know what direction you should go. It will have a considerable impact on your first tax year of being married.