It’s wedding season! Brides everywhere are busy putting the final touches on the seating charts, final dress fittings, and guest list RSVP’s. What they are probably NOT thinking about is how getting married will affect their taxes. However, it is just as important to plan your taxes as it is to pick out the perfect flower arrangement.
Do I file jointly or separately? When you get married, the only filing statuses available to you are Married filing Jointly or Married filing Separately. Most couples file jointly, because that status allows you the most beneficial tax treatment, the most credits and overall best outcome. However, there are good reasons to file separately. Your spouse has significant existing tax debt. If your spouse already owes Uncle Sam money, if you file jointly, the IRS will seize any refund you have until the debt is paid. One way to avoid this is to file separately. Under certain circumstances, you could still file jointly and use the Innocent Spouse or Injured Spouse protections and get your portion of the refund. However, these protections usually take much longer to process – up to 6 months or more – so if getting your refund quickly is important to you, this may not be the best option. One or both spouses have significant deductions. Most itemized deductions claimed on Schedule A are limited to a percentage of your Adjusted Gross Income (AGI). This means that if your AGI is $100,000, you would have to have medical expenses in excess of $10,000 (10% of your AGI – 7.5% if you are over 65) to qualify. In addition, your allowed expenses would have to be more than your standard deduction to make sense. However, if one spouse has an AGI of $25,000, the threshold would only be $2,500. It is important to keep in mind that while you would be able to maximize your deductions with this strategy, filing separately will exclude you from many credits, such as Education Credits, Earned Income Credit, Child and Dependent Care Credits and Adoption Credits. You should consult with a skilled tax professional to make sure that your strategy makes sense for your situation. What is my name? If you change your name, it is important that you notify the Social Security Administration and have your name changed on your Social Security card. If the name on your return does not match your records with the Social Security Administration, the IRS will not be able to process your return and it will be rejected. What about my paycheck? Because of all the changes that come to your tax rate when you get married, it is important to adjust your withholding with your employer to make sure the correct amount of tax is being withheld. You can figure what your withholding amount should be by using the IRS Withholding Calculator, which can be found here: https://www.irs.gov/individuals/irs-withholding-calculator . Once you determine what your correct withholding should be, be sure to submit a new W-4 form to your employer. They should be able to provide you with one, or you can print one out here: https://www.irs.gov/pub/irs-pdf/fw4.pdf Congratulations on your marriage and best wishes for a long and happy life!