With marriage comes many things — from new living arrangements to new family members to handling finances together. But there’s one thing you might not have considered doing together — filing your taxes!
I’m here to help you tackle this challenge as a married couple. Let’s start with some tax tips for newlyweds!
Suppose you’ve recently gotten hitched. Congratulations! After the wedding, it’s time to truly become a team. One of the most significant changes when getting married is your tax return. The first tax season can be stressful for a married couple, so I’m here to help.
Tax Tips For Couples
Before you start crunching numbers, you should know a few things about how taxes work for newlyweds.
Here are some essential tips to help you file your taxes as a married couple:
Get in touch with HR
Check with HR if you’re moving or changing jobs. If you plan to move in with your spouse, or if they have already moved into your place, make sure that any tax-related paperwork is taken care of before the end of the year. Talk to HR about withholding changes and any other paperwork that may need updating. If they are changing jobs, they will need to sign up for direct deposit before leaving their old employment so they can receive their first paycheck from their new one as soon as possible!
Get to Know the Moving Expenses
Know how moving expenses will be treated on your taxes. Moving expenses can be deducted from your taxes, but only if the new job location is at least 50 miles farther away than where you were living before — or if you live in a different state than where you worked back (even if it’s less than 50 miles away).
Choose a Filing Status
When you marry, you must choose a filing status for your taxes. You can’t file as single if you’re married, and there are only a few other options.
The most common filing status options are:
- Married filing jointly
This is the default option if you don’t specify another one. It’s usually best for couples with similar incomes who want to combine their incomes and deductions. If one spouse has a higher income than the other, they may want to use the married filing separately so they don’t have to pay more taxes than they would as individuals.
- Married filing separately
This option is helpful if you want to keep your finances separate or have different income levels or deductions compared with your spouse’s. However, using this option means that each spouse will be responsible for paying taxes on their individual income alone rather than combining them as one tax return — which can result in higher overall tax liability.
Keep Your SSN Handy
If you are a newlywed, it’s essential to keep your social security number close at hand. It’s not just for tax time — your SSN is also the key to getting married.
Here are three reasons why:
- You need your SSN to apply for a marriage license. The application asks for information such as name, date of birth, current address, and social security number. You can apply for an appointment at any county clerk’s office in the state where you plan to get married.
- When it comes time to file taxes jointly with your spouse, you will need your SSNs on all forms and schedules. Filing individually won’t cut it!
- If you have children together, they will be eligible for Social Security benefits if one or both parents die before retirement (or if both parents retire early).
Take Advantage of Tax Brackets
Tax brackets are income ranges that determine how much you pay in taxes. Each income range has its rate of taxation — for example, if you earn between $77,550 and $165,000 per year, the government takes 28% of your income in taxes. That’s called the 28% bracket. If you earn more than $165,000 annually, the government takes 33% of your income in taxes (the 33% bracket).
If you’re married and filing jointly, your taxable income will be split between you and your spouse. That means that if one spouse has a higher income than the other, both spouses will pay taxes on their share of the total income at a lower rate.
In addition to the lower tax rate, there are other benefits to filing jointly:
- You can claim a standard deduction or elect to itemize deductions.
- You can file for head of the household status if you qualify (if someone else is not claiming you as a dependent).
- You may be eligible for credits such as the Earned Income Credit or Child Tax Credit.
Notify the Government of Your Marital Status
If you or your spouse have health insurance through a government Marketplace (Exchange), you must notify the Marketplace of your change in marital status. You can call the Marketplace call center, visit a local office, or visit the government’s website.
You don’t need to do anything if you have coverage through an employer or another source. Your coverage will continue unless your plan allows changes based on marriage and divorce. If it does, ensure you understand the rules and follow them carefully.
If you lose coverage because of a change in marital status, you may be eligible for a particular enrollment period (SEP). A SEP allows people who lose eligibility for their current health plan to enroll in another plan without having to wait until open enrollment starts the following year again.
There are many things to learn about taxes, from single to married for the first time. I’ve compiled all the essential tips to help you get started with your first filing. At Citrine Accounting and Taxes, we can do a comparison before filing to see whether MFJ (married filing jointly) or MFS (married filing single) would give you the best tax benefit. Call today at 602-601-0183.