Getting married changes many things, including your financial situation. A joint account, home ownership, a shared budget, and countless other firsts can come into play. Many newly wed couples are curious about the best way to go about taxes. If you’ve recently tied the knot, prepare yourself for a different way of filing with these tips.
Tax Changes for Newly Wed Filers
You now have two choices: Married Filing Separately or Married Filing Jointly. Almost always, you are better off filing jointly thanks to less paperwork (one return to file) and less taxed owed.
When to file separately? Some couples decide against merging their finances for many reasons, such as avoiding responsibility for your spouse’s tax liability. In some cases, filing separately can result in less taxes due to some state tax laws.
After you get married, there’s a lot of paperwork – add changing your W4 at work to the list. For most, you will change this to have either more or less withheld. It is often best to consult a tax professional in this matter, as too much withheld can result in strained finances, while too little will result in an unexpected tax bill.
You must change your name with the Social Security Administration if you have replaced your last name with that of your dearly beloved. Otherwise, your return will be delayed, which means your refund as well. You can easily do this online, over the phone, or at your local Social Security office.
Newly Wed? Watch out for the Marriage Penalty
Something called the ‘marriage penalty’ is a common reality. This isn’t an extra line on your tax return, but an unfortunate circumstance of being married – you sometimes end up paying a bit more in taxes than when you were single. This is because some tax breaks phase out at higher income numbers. Unfortunately, filing separately doesn’t mitigate this. Instead, many of the financial circumstances of marriage, like home ownership, can offer tax breaks that offset these higher taxes. Carefully take your budget and potential deductions and credit into consideration to prepare yourself for the next tax season.