Newly married this summer?
by Norman Short, business and tax lawyer, GSJones Law Group, P.S.
You’re probably worn out from dealing with the myriad of details your wedding demanded. The last thing you want is some more tasks. If, however, you take a little time now, you will save a lot of time in a few months when you file your first taxes together (or not).
Newlywed Tax Tip #1: Make official name and address changes
Yes, you’ve spent hours changing your relationship status and perhaps your name on social media. You’ve also spent hours making sure even great aunt Penelope that you haven’t seen since you were 11 knows about your marriage. Now it’s time to let your employer, the IRS, and Social Security know about changes in your name or address.
IRS: File their change of address form if one or both of you have moved.
Your employers: Tell your employers about any changes in name or address. Even if you are not changing the name you use at work, if you have a new legal name, the personnel department needs to know.
Social Security Administration: If one or both of your are changing your name, you will need a new Social Security card.
Newlywed Tax Tip #2: Decide on how to handle your finances
Whether or not to combine bank accounts and other finances is a very personal choice. If, however, you plan to file your taxes separately, it is much better to keep your finances separate. In most cases, it is better to file jointly and how you handle your finances will not make a difference. Other than only having to file one return (a major plus), when you file jointly you qualify for a higher standard deduction and more tax credits.
In general, filing separately only makes sense when there is a significant difference in income level between you. If you are in doubt, a quick consultation with your accountant or a tax attorney will resolve the matter.
Newlywed Tax Tip #3: Estimate your new taxes
If you plan to file jointly, it’s important to avoid an ugly surprise at tax time. Use a simple tax calculator, such as the one at 1040.com. There are a variety of steps you can take before January 1 to lessen the tax time ouch. Others, such as contributions to IRAs, can be started at the time you file your taxes. Make plans now, however.
Newlywed Tax Tip #4: Adjust your W-4
Whether you have found that you will owe IRS more or your tax calculation reveals yet another benefit of marriage, adjust your W-4. Increasing your withholding will take some of the bite out of tax filing. If on the other hand, you project a refund, take it now. IRS will not pay you interest on the extra money it is taking now. Invest your refund now by decreasing your withholding now. You may want to invest in mutual funds for the future. Or you may want to invest in your new home or memorable experiences with your new spouse. It’s up to you.
Of course, if one of you is self-employed or a partner in a business you will need to consult your accountant or an attorney about what changes need to be made.