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4 Tax Tips For Newlyweds

4 Tax Tips For Newlyweds - TaxACT

Have you recently gotten married?

Getting married changes everything – your tax filing status, how much tax you pay, and more.

Utilize these tax tips for getting started off right in your married life.

Use the right filing status

As a married person living with your spouse, you only have two choices of tax filing status. You can file Jointly with your spouse, or you can file as Married Filing Separately.

You’re almost always better off filing jointly. You’ll probably pay less tax, and it’s easier, too.

You only have to prepare one return, and you don’t have to decide who takes each deduction.

One reason you may not want to file jointly is if you don’t want to be responsible for your spouse’s tax liability, or if you and your spouse prefer to keep separate finances.

In a few cases, you may pay less tax by filing separately due to state tax laws.

Avoid having too much or too little withheld

One of the first things you should do after you get married is file a new Form W-4 with your employer. You may need to have more tax withheld, or less than you did before you were married. It’s not likely to stay the same.

It’s not a good idea to guess when you’re filling out your Form W-4. Too many factors come into play that can affect your tax liability.

If you have too much income tax withheld, you may not have your own money available when you need it.

If you have too little withheld, you’ll have an unpleasant surprise when you file your tax return next year.

It’s well worth your time to use TaxACT’s W-4 withholding topic to make sure you’re having the right amount of tax withheld from your pay. You can print the form in TaxACT and hand it in to your payroll department.

Do not file it with the IRS.

Change your name with the Social Security Administration

If you change your name when you get married, it’s very important that you update it with the Social Security Administration before you file your tax return.

Otherwise, the IRS may delay processing of your return – and any refund you are expecting.

You can update your name with the Social Security Administration in one of three ways: Your local Social Security office, by phone at 1-800-772-1213, or on the Social Security website at www.ssa.gov.

Will I have to pay a “marriage penalty” now that I’m married?

There’s no line item for a marriage penalty on your tax return. That doesn’t make the penalty any less real. The marriage penalty is simply a way of saying that you may sometimes pay more tax as a married couple than the two of you would have paid as single people.

For example, some tax breaks and other provisions phase out at higher income levels. When the levels for married couples are less than double the levels for single people, there is, in effect, a penalty for being married.

Filing separately does not help avoid the marriage penalty.

In fact, it can make it worse. Many tax breaks are reduced or eliminated if you file as Married Filing Separately.

On the other hand, if one of you makes significantly more money than the other, your tax on a joint return may be less than the total you were paying as single people.

Do you and your spouse have all joint financial accounts, or do you still keep some in your own names?

Photo credit: nattu via photopin cc

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About Sally Herigstad

Sally Herigstad is a certified public accountant and personal finance columnist and author of Help! I Can't Pay My Bills, Surviving a Financial Crisis (St. Martin's Griffin). She writes regularly at CreditCards.com, Bankrate.com, Interest.com, RedPlum, and MSN Money. She is an experienced speaker and a member of Toastmasters International. Follow Sally on Twitter.

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