Important Tax Considerations for Newlyweds
May 08, 2023
With wedding season approaching, many couples are busy thinking about photographers, cakes, flowers, guest lists, and dozens of other details. One more item to add to the mix: taxes. Getting married can affect your financial picture in several ways. Here are some important things to know as you tie the knot.
As your relationship status changes, your tax situation will likely change. Make sure you take these considerations into account:
- Filing Status: Your tax filing status will change from single to married filing jointly or married filing separately. Your combined income as a married couple may affect your tax liability. Determine your new tax bracket and compare both filing options to figure out the best approach for your situation.
- Deductions and Credits: You may be able to claim deductions and credits that were not available to you as an individual or you may find some deductions and credits phase out at your higher combined income level. Check your eligibility.
Once you’re officially married, make sure you take care of these details as you start your life together:
- Change Your Name and Address: If you change your name when you get married, you need to report your new name to the Social Security Administration. The name on your tax return must match the name on file with the Social Security Administration, or your tax refund could get delayed. Similarly, if you move, notify the IRS and the U.S. Postal Service about your change of address.
- Check Your Withholding: If your combined income will change the amount you owe in taxes or put you in a different tax bracket, adjust your withholding to account for the difference. Check your current withholding to ensure that the correct amount is being withheld from your paycheck and update it if necessary.
Financial stress can take a toll on relationships. It’s helpful to address general financial issues for a stronger union.
- Discuss Your Financial Goals: Want to buy a home, retire, or pay off student loans? Talk about these goals as a couple and create a plan to achieve them.
- Create a Budget Together: Stay on track with your goals by developing a spending plan. Include both of your incomes and expenses, including any debt you have, in the plan.
- Plan for the Future: Consider additional financial elements like life insurance, disability insurance, retirement planning, and estate planning.
Congratulations! As you take this major step forward in your lives together, let us help you get started on a sound financial footing. Schedule an appointment with one of our tax professionals to help you plan for your financial future as a couple.
