Tax tips for newly married couples
(BPT) – In most parts of the country, the months of June, August, September and October are the most popular for weddings. Whether recently married or anxiously counting the days until you tie the knot, there are some important tax implications that you and your spouse can’t afford to overlook.
‘In between the flurry of wedding planning, dress shopping and bridal showers, few engaged couples stop to think about how getting married will affect their income taxes,’ explained TaxAct spokesperson, Shaunna Morgan. ‘While it’s important to understand the tax consequences, keep in mind that you can still do your own taxes. TaxAct, a leading DIY tax solution, asks simple questions about life events like marriage to guide you through the tax implications and help you get all of your deductions to maximize your refund.’
Your name(s) and Social Security number(s) are critical elements of your tax return. Both identifiers must exactly match the information the Social Security Administration (SSA) has on file. That means if you legally change your name after you get married, the SSA needs to know about it.
To get a Social Security card with your new name, you’ll need to provide proof of identity, such as a marriage certificate, fill out an application and either mail it or deliver it in person to your local SSA office.
You’ll want to do this long before you file your income tax return.
If you’re moving, remember to report your new address to the Internal Revenue Service (IRS). The fastest way to make the change is to complete Form 8822 available on the agency website at www.irs.gov.
New filing status
Once you’ve said, ‘I do,’ you’ll have the option to claim one of two filing statuses on your tax return: married filing jointly or married filing separately. If you and your spouse each earn an income, you might consider running the numbers to determine if you have a lower combined tax by filing one way versus the other. Some tax software packages do the calculations for you so it’s easier to make an informed decision when selecting a filing status. TaxAct Deluxe, for example, gives users a Joint vs. Separate Analysis report that does all the calculations so you can see your estimated refund amounts for each filing status. For many couples, married filing jointly results in lower income tax liability.
Keep in mind that no matter when in the year you get married, you are considered married for the full year. Even if your big day is December 31, you will have a married status in the eyes of the IRS for the entirety of that tax year.
Changing your tax withholding
Any time you have a life change you should revisit your Form W-4. Getting married is definitely one of those times. If both you and your spouse work, you’ll likely have a higher combined income, which may put you into a higher tax bracket. In order to ensure the right amount of tax is withheld from your paycheck, you’ll want to update your Form W-4 to ensure you aren’t having too much or too little tax withheld.
Affordable Care Act premium tax credit
If you or your spouse receive health insurance through a government-sponsored marketplace and receive advance payments of the premium tax credit to help offset the cost of your premiums, you’ll want to review your coverage after the wedding, and notify the marketplace of your newly married status. Reporting this change will help you avoid having too much or too little premium assistance paid and ultimately, help you steer clear of owing additional money or getting a small refund when you file your taxes. If you elect to keep your coverage ‘as is,’ separate from your spouse, or wish to add your spouse to your coverage, you should notify the marketplace of your special changes in coverage. If you elect to go under your spouse’s health plan, be sure to cancel your marketplace coverage.