5 Tax Tips for Newlyweds

Newlyweds who will file taxes together for the first time

Now that you are a married couple, your tax situation will be different. It’s best to prepare as early as possible. That’s why we’ve put together a basic tax prep checklist that should make it simpler and easier to file your tax return as a married couple. Here are five things you’ll need to do to get ahead of your tax situation:

1. Get a new Social Security card

When you file a tax return, your name and SSN must match the records held by the Social Security Administration. If one of you changed your name, you’ll need to report the change and file for a new Social Security card.

But there’s more. Married couples have some options when it comes to claiming Social Security that single individuals do not. Coordinating your benefits with your spouse’s benefits can help you both get the most out of Social Security.  

For example, when you begin drawing Social Security, you could claim benefits based on your own earnings, or you could claim 50% of your spouse’s benefit. This is a major advantage if one of you doesn’t work or earns significantly less income than the other. Another advantage – known as the survivor benefit – says that when one of you passes away, the surviving spouse will continue to receive the higher of the two benefit amounts.   

It’s important to note that Social Security only makes up a portion of the income you and your spouse will receive in retirement. The rest is up to you – so you may want to begin setting aside more income for retirement now that you’re married. 

Read more:  All About 401(k) and IRA Savings Accounts  

2. Update your W-4

When you started at your job, your employer asked you to fill out Form W-4, Employee’s Withholding Allowance Certificate. The amount of federal income tax that has been withheld from your pay is based on your personal and financial situation at that time. Now that you’re married, you’ll want to revisit the Form W-4 and change your marital status.

Note: if you and your spouse both work, your combined incomes may move you into a higher tax bracket. Learn more about this below.

3. Report your new address and learn about available tax breaks

Not everyone buys a home when they get married, but for some couples, investing in a property together is a goal. As a bonus, you and your spouse can qualify for some significant tax breaks. For example, the Mortgage Interest Deduction allows you to deduct the mortgage interest on up to $750,000 of qualified debt if you are filing jointly.  

If you decide to sell a home and you sell it for more than you paid for it, the law says that as a couple, you can exclude up to $500,000 of capital gains – as long as you meet certain rules. If you file separately, you can exclude up to $250,000, using the Capital Gains Exclusion. After you move into your new place, be sure to let the IRS know by filling out Form 8822, Change of Address. 

There are plenty of tax breaks available for newlyweds who rent before investing in a home. Learn about seven credits and deductions you may be eligible to claim the next time you file taxes.

4. Notify the Health Insurance Marketplace

If you purchase your health insurance through the Health Insurance Marketplace, certain factors like marriage, family composition, and changes in income will affect how much you receive as your premium tax credit.

Now that you are married, you’ll need to report the changes in circumstances to the Marketplace. This will allow them to adjust your advance payment amount and ensure that your premium tax credit is accurate when you file your return.

5. Decide what your filing status will be

Since you’re no longer single, you can’t file as single. For tax purposes, your marital status at the end of the year determines how you will file for the entire year.  

For example, even if you got married in November or December, you are required to file as married filing jointly or married filing separately for the entire year. You may want to figure out the tax both ways to find out which status results in the lowest tax.  

If you and your spouse decide to file jointly, you may find yourselves in a higher tax bracket when you combine your incomes for tax purposes. What this means is you’ll pay a higher percent of your earnings for federal income tax than you did when you were still single.  

This is known as the “marriage penalty” tax. It’s also worth noting that if one of you significantly out-earns the other, then combining your salaries can put you into a lower bracket and reduce your overall taxes.   

Fortunately, Congress has taken steps to ensure that couples don’t pay significantly more in taxes just for combining their incomes. When you file your taxes with TaxSlayer, the deduction finder goes to work to find all possible credits and deductions to keep your tax bill as low as possible, so you get the biggest refund you deserve. Then you can use our refund calculator to see how your spouse’s income may impact your refund or tax bill.   

Disclaimer:
This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.

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