If you are a frequent reader of this blog, you know that I typically don’t post articles from others… but the article below, from Drucker and Scaccetti’s Tax Warrior Chronicles, has so much important information that I really wanted to share it. Thanks to Jane Scaccetti for permission to do so!
Cupid’s Arrow – Tax Tips for the Soon-to-Be Betrothed
Drucker and Scaccetti
By: Clare Porreca, CPA, MT
It’s Valentine’s Day and love is in the air! As newly-engaged couples plan weddings and focus on dress colors, cake flavors, and honeymoon destinations, we offer some tax tips and advice. Today is, after all, the annual day of love. And, Tax Warriors love saving you tax dollars!
- As you choose a date for your big day remember, according to the IRS, no matter which day you marry, you will be considered married for the ENTIRE year, if married as of December 31. So, if you’re planning a big New Year’s Eve wedding on 12/31/17, you will file a 2017 tax return with a ‘married’ tax status.
- When you file your tax returns after you’re married, your names and Social Security numbers must match the Social Security Administration’s (SSA). If you or your spouse changed your name, report that change to the SSA and receive a new Social Security Card. If you don’t change your name with the SSA before filing your tax return, reflect your maiden name on that return.
- If you plan on moving before or after you get married, update your address on all your accounts (or at least arrange mail forwarding). You don’t want your tax documents being mailed to an outdated address. You’ll also want to file Form 8822, Change of Address, with the IRS so it has your updated information.
- Once you’re married and file a joint tax return with your spouse, you’ll either experience the Marriage Bonus or the Marriage Penalty. The Marriage Bonus occurs when you pay less tax as a married couple than you would have as single taxpayers. This typically occurs when the two spouses have different income levels. The Marriage Penalty occurs when you pay more tax as a married couple than would be due as single taxpayers. This typically occurs when the two spouses have similar levels of income. The Tax Policy Center has a Marriage Bonus & Penalty Tax Calculatorto determine the impact of marriage on your taxes.
- If you are impacted by the marriage penalty, you and/or your future spouse should increase your federal withhold from each paycheck by updating your W-4 with your employer. This could reduce or eliminate a potential balance due when you file your tax return.
- If you have retirement accounts or life insurance policies, update your beneficiary designations. You may have chosen your beneficiaries prior to meeting your future spouse.
- If both you and your future spouse have health insurance through your employers, check if it one spouse should join the other’s plan. You could save some money and end up with a better plan!
- Consider opening joint bank accounts prior to getting married. This may make depositing all those wedding gifts payabe to “Mr & Mrs.” easier to deposit.
An engagement is an exciting time in a couple’s life and it’s easy to get caught up in all the wedding planning details. We understand that checking out a tax calculator online is not as much fun as searching for DIY centerpieces. But, we hope our engaged readers will remember a few of our tips and share them with other couples making the big plans. Consider it our gift to you. Happy Valentine’s Day!
photo courtesy of Susan Stripling Photography