So you’ve gotten married, popped the question, set a date, and are busy planning your dream wedding. But amidst the whirlwind of cake tastings and venue scouting, there’s one crucial detail that often gets overlooked: the impact of marriage on your taxes.
While navigating wedding vendors and guest lists might seem stressful, understanding the tax implications of saying “I do” can save you a significant headache (and potentially money) come tax season. This article will equip you with the knowledge you need to approach your married life and your tax filings with confidence.
Understanding the Tax Landscape as a Married Couple
The key difference between filing taxes as single and as married lies in your filing status.
- Single: This is the default filing status for unmarried individuals.
- Married Filing Jointly (MFJ): This is the most common filing status for married couples. It allows you to combine your income and deductions on a single tax return, potentially leading to a lower tax burden.
- Married Filing Separately (MFS): While less common, this option allows each spouse to file their own tax return.
The Potential Tax Benefits of Marriage
While the term “marriage penalty” used to be a concern for some couples, tax code changes have made filing jointly more advantageous in many cases. Here’s how getting married can benefit you tax-wise:
- Lower Tax Brackets: Combining your income with your spouse’s could push you into a lower tax bracket, resulting in a smaller tax bill.
- Increased Standard Deduction: The standard deduction, which reduces your taxable income, is doubled for married couples filing jointly compared to single filers.
- Tax Credits and Deductions: Marriage may open doors to additional tax credits and deductions you wouldn’t qualify for as single, such as the Earned Income Tax Credit or the Child and Dependent Care Credit (depending on your situation).
Important Tax Considerations After Getting Married
Now that you understand the potential benefits, let’s delve into the specific actions you’ll need to take after tying the knot:
1. Withholding Adjustments:
Your marital status impacts how much federal income tax your employer withholds from your paycheck. After you get married, you’ll likely need to adjust your W-4 forms to reflect your new filing status and avoid under withholding (and potential penalties) or over withholding (a cash flow issue).
2. Health Insurance Considerations:
If you or your spouse receives health insurance through a government Marketplace plan, your combined income could affect your eligibility for premium tax credits. Notify the Marketplace of your marriage to ensure your enrollment and credits are adjusted accordingly.
3. Updating Your Records:
- Social Security Administration (SSA): If you change your name after marriage, update your records with the SSA to avoid any discrepancies on your future tax returns.
- U.S. Postal Service (USPS): Notify the USPS of your new address to ensure you receive important tax correspondence from the IRS or state agencies.
- IRS: File Form 8822 to officially notify the IRS of your address change.
4. Retirement Accounts:
If you participate in a company retirement plan or an Individual Retirement Account (IRA), you might want to consider revising your beneficiary designations to include your spouse.
Conclusion
Getting married is a joyous occasion, but it’s important to factor in the tax implications. By understanding the potential benefits and taking the necessary post-marriage actions, you can ensure a smooth transition and potentially save money on your taxes. Remember, consulting with a tax professional can provide personalized advice based on your specific financial situation.
