Skip to content 
Tax Considerations for Newlyweds
Wedding bells ringing, confetti flying, and champagne popping, you and your beloved have just started your lifelong journey together. Amid the whirlwind of excitement and euphoria rightly associated with newlywed bliss, it’s time to talk about something crucial but often overlooked – Newlywed Taxes. As the nationwide tax relief experts, Brightside Tax Relief urges all newly married couples to grasp the tax implications of your new marital status.
Understand Filing Statuses
Your filing status essentially determines how much tax you pay and standard deduction you are accorded. The first decision you need to make about your newlywed taxes is about your filing status. Married couples have two options: either file jointly as “Married Filing Jointly” or separately as “Married Filing Separately”.
In most cases, filing jointly offers more tax benefits. For instance, deductions like student loan interest and child and dependent care credits are often limited or unavailable for couples filing separately. However, for couples with substantial out-of-pocket medical expenses or those with a spouse carrying hefty student loans, filing separately might be more beneficial.
Report Any Name or Address Change
To avoid discrepancies in your tax returns, promptly report any changes in names or addresses post-wedding to the appropriate agencies. For instance, if your spouse decides to take your name after marriage, you should notify the Social Security Administration to change the social security card. Similarly, the IRS should be informed of any address changes to ensure you receive all IRS correspondence in a timely fashion.
Review Your Withholding Decisions
Each year, you indicate to your employer how much tax you want witheld from your paycheck – this is your “withholding”. Newlyweds should update their W-4 forms with their employers to reflect their new marital status and any necessary changes in their withholdings. Failing to adjust your withholdings appropriately could result in significant underpayment or overpayment of taxes.
Mind the Health Insurance Requirement
The nation’s health law, the Affordable Care Act, has specific requirements for obtaining qualifying health coverage. Newlyweds should be cautious about remaining uninsured or under-insured to avoid penalties. If you’ve recently gotten married, you may be able to qualify for a Special Enrollment Period that enables you to buy or adjust insurance through the Health Insurance Marketplace or directly from an insurance company.
Understand and Leverage Tax Benefits
Tying the knot opens the door to possible tax benefits, making understanding them crucial. Here are a few notable ones:
– Standard Deduction: Married couples filing jointly can claim a standard deduction that’s double the amount for single filers.
– Gift Tax Exclusions: Married individuals can gift each other any sum of money without tax implications. This can be particularly beneficial for estate planning.
– Spousal IRA Contributions: This option allows a working spouse to contribute to the IRA of a spouse who isn’t working or has minimal income.
For more information and tips on newlywed taxes, visit the IRS website.
Plan for your Financial Future Together
Apart from the immediate tax implications of marriage, consider the long-term picture too. Start talking about retirement plans, savings goals, and investment options that can offer you benefits throughout your life together. The time to plan for your financial future is now.
Solicit Professional Help If Needed
Taxes can be complex, even more so with a recent change in marital status. Feel free to solicit tax advice from professionals like Brightside Tax Relief, especially if you anticipate significant tax changes or have complex tax situations. We can help to ensure you follow correct tax practices and avoid errors that could result in penalties.
With the insight we’ve shared in this article, you should be well on your way to understanding and managing your newlywed taxes successfully. Remember, the key is to stay informed, seek professional advice when necessary, and plan for the long-term. As you embark on this new journey together, let financial savvy be part of your triumphs and celebrations.
