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5 Things You Need To Know About Taxes After Getting Married

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5 Things You need to Know About Taxes after Getting Married

by Jessica Hidalgo, CPA, Senior Accountant

5 Things You Need to Know About Taxes After Getting Married

You have said “I-do” and while the honeymoon may be over, as newlyweds you can make the wedded bliss last a little longer by doing a few things now to avoid problems during next tax season.

 

  1. 1. Update your name and address. To avoid confusion when filing your 2017 tax return, newlyweds will need to update the Social Security Administration with name changes by filing form SS-5. Failure to update any changes could prevent wages from being posted correctly to your social security record, which may lower your future benefits and cause delays when you file your tax returns. The list of documents needed to obtain a new social security card can be found on the Social Security Administration’s website www.ssa.gov. Newlyweds with address changes should notify the Internal Revenue Service by filing Form 8822 and the U.S. postal service to make sure they receive all tax related mailings.
  2. 2. Update your employer on any changes. One of the first things newlyweds should do is to notify the payroll department of their change of marital status by filing a new W-4. You may need to have more tax withheld or less than you did before you were married. Most likely, your withholding should not stay the same. If you have too much withholding, you might not have money available when you need it, and if you do not have enough withheld, you might be in for an unpleasant surprise when you file your individual tax returns. You also need to update your current employer of any address and name changes so that you receive a correct W-2. In addition, if you changed jobs during the year in which you are married, you should be sure to update any former employers.
  3. 3. Filing status. Your filing status is determined as of December 31, each year. Once married, you have two choices on filing status; you can file as Married Filing Jointly (MFJ) or Married Filing Separately (MFS). Newlyweds can no longer file a single status tax return, which is actually a common mistake. Filing joint allows spouses to combine income and deductions on one tax return where both spouses are held jointly responsible. Whereas when filing married separately, each spouse is responsible for their own return and files based on their own income and deductions. Typically, filing jointly has the greater tax benefit, but there are cases in which filing separately is more advantageous. You may want to figure out your taxes both ways to determine which method is most advantageous to your situation.
  4. 4. Exemptions and deductions. When filing a joint return, you are now entitled to two exemptions (one for each spouse). For 2017, the exemption amount per person is $4,050, so when filing jointly, the exemption is $8,100. If you have dependents, there is also an additional $4,050 exemption available per dependent. In addition, the standard deduction doubles from $6,350 for single filers to $12,700 for married taxpayers filing jointly. However, if you did not qualify to itemize deductions before you were married, that could possibly change when filing jointly. Some items that are eligible to be itemized are medical expenses, charitable contributions, mortgage interest, taxes paid, and other miscellaneous deductions. If your itemized deductions are more than the standard deduction, this could save some money.
  5. 5. Looking into the future. While income tax is the most commonly thought of tax, there are also gift and estate taxes that should be considered. Due to the marital deduction, spouses can give each other an unlimited amount of gifts without owing any gift or estate tax. This can be highly beneficial for estate planning purposes. Furthermore, there are non-tax aspects of estate planning to consider. In addition to meeting with a tax advisor, you should set up a meeting with an attorney to create a will and an estate plan that meets your new needs

While taxes might not be the first thing on your mind as a newlywed, taking action now will help you avoid a few headaches during tax season. For more information regarding the effects of a new marriage on your tax situation, please contact us.

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