Congratulations on your recent wedding! While you’re busy basking in post-wedding bliss, it’s important to remember that your newfound marital status can have a significant impact on your taxes. Don’t worry, we’re here to guide you through the potential tax considerations and actions you should take as a newly married couple.
Before You Say “I Do”: Tax Planning for Soon-to-be Spouses
- Filing Status: Tax filing status is determined on the last day of the tax year. So, regardless of when you get married in 2023, you’ll be considered married for the entire year and can’t file as single or head of household. You’ll have two options: Married Filing Jointly (MFJ) or Married Filing Separately (MFS). Generally, MFJ offers a lower tax bill, but consult a tax professional if you have complex finances or significant income disparity.
- Deductions and Tax Brackets: The standard deduction almost doubles for married couples compared to single filers. However, if you previously itemized deductions, you might lose some benefits when filing jointly. Combining incomes can also push you into a higher tax bracket, potentially reducing certain tax credits.
- Spousal Debt: Beware of your spouse’s past tax liabilities or child support debts. The IRS might withhold your joint tax refunds to settle these debts. You can file an “injured spouse allocation” form to claim your rightful share of the refund.
- Healthcare Marketplace: If you receive health insurance subsidies through the Marketplace, your combined income and family size might affect the amount of credit you receive. You might need to pay back some or all of the advanced premium tax credit.
- Spousal IRA: If one spouse earns significantly less, consider a spousal IRA. This allows contributions to the lower-earning spouse’s IRA for potential tax benefits, with a combined contribution limit higher than a single IRA.
- Capital Loss Limitations: Married couples can only deduct a combined total of $3,000 in capital losses, unlike the $6,000 possible for two single filers.
- Impact on Parents’ Returns: If your parents claimed you as a dependent before marriage, they likely won’t be able to anymore. This might also affect their eligibility for certain education credits.
Post-Wedding Tasks: Keeping the IRS Happy
- Update Social Security Administration (SSA): Report any name changes to the SSA to ensure your name and Social Security number match on your tax return. This can be done easily online.
- Notify the IRS: If you have a new address, file Form 8822 with the IRS to update your records.
- Inform the U.S. Postal Service: Forwarding your mail is crucial to avoid missing important tax documents. Notify the U.S. Postal Service of your new address.
- Review Withholding and Estimated Taxes: Your combined income might necessitate adjusting your withholding allowances (W-4) or estimated tax payments to avoid underpayment penalties. The IRS website offers resources and a tax withholding calculator to help you.
- Update the Marketplace: If you receive subsidized health insurance, notify the Marketplace of your marital status change. This also applies if you were previously covered under a parent’s Marketplace plan.
Remember, this is just a general overview. Consulting a tax professional is highly recommended to ensure you’re maximizing your tax benefits and filing correctly.
By following these tips and seeking professional guidance if needed, you can navigate the tax implications of married life smoothly and avoid any unpleasant surprises come tax season. Congratulations again on your marriage, and best wishes for a happy and prosperous future together!
