As if filing your taxes as a single individual wasn’t challenging (not to mention confusing) enough, but now that you’re married (or soon-to-be), you have to file together with your partner—and taxes for newlyweds can be a little complicated. This is even the case for couples who choose to keep their financial accounts separate. The only variables will be whether you choose to file as married filing joint or married filing separately. The good news is that joint returns can often take less time and money, compared to each individual having to file his or her own return since the income brackets differ, according to Suzanne Wheeler, certified financial transitionist and senior wealth advisor. “Married couples can often find themselves in a lower tax bracket when they the file a joint return vs. when the file as single, which can result in a lower tax liability,” she explains.
Additionally, with the new tax law came an increase in the standard deductions when it comes to taxes for newlyweds. “The new tax law increased the standard deduction for married couples filing jointly from $12,700 to $24,000, so married couples filing separately can each take $12,000,” says Wheeler. “Due to this increase in standard deductions for joint returns, many individuals and couples will be utilizing the standard deduction.”
But before you meet with your accountant or saddle up to use TurboTax, there are a few more things you and your partner should know about filing taxes for newlyweds.
Get to know each other financially.
You might think you know everything there is to know about your new spouse, but if you’re not well-versed on his or her finances, it’s time for a sit-down lesson. Abby Eisenkraft of Choice TaxSolutions Inc. in Melville, New York, suggests setting aside a night to take out your pay stubs, reviewing what allowances you’ve chosen on your W-4 form at work, and seeing if there’s anything that needs adjusting now that you’re married and thinking about taxes for newlyweds. “If you don’t have enough withholding, there will be a tax bill in your future, and there can be interest and penalties too if it’s significant enough, so make sure you are proactive and pay the proper tax during the year,” she says.
Notify IRS of name or address change.
If you recently changed your name from your maiden to your married, or perhaps you and your spouse created a new last name together, it’s important to report these changes to the Social Security Administration so that your social security number matches what’s on your tax forms. If you don’t have time to change your name before the tax deadline, Wheeler suggests filing using your maiden name on the tax return and then taking care of the name change before you file your next return. If you’ve just moved, she recommends filing a Form 8822 or filing your timely joint return and updating your address on your return to notify the IRS of your address change.
Keep track all of your tax-related expenses.
When it comes to filing taxes for newlyweds, Byron Ellis of United Capital Financial Advisers, recommends setting up a system ahead of time, such as creating a Quicken or Mint account to categorize your expenses, so that you as you spend your money you make the “tax” decisions at the point of sale. This, he explains, will help you avoid a situation where you’re scrambling to find receipts so close to a looming deadline. “Good software can help you with this by allowing you to ‘code’ that church gift as a ‘contribution’ at the time you write the check so that, in the end, you add up all of the ‘contribution’ entries and you have your total for the year,” he says. “This step is even more important now that you have two people to report on.”
Keep all your tax-related documents in one place.
Through January and March, you’ll be sent a myriad of tax documents, all of which are important to store in one place, be it a drawer, a file folder or a special box. Even if you're a messier couple, it's essential to keep track of these documents. “You also need to remember to either print those documents that arrive via email or store them in a special virtual folder,” he adds. “I choose to print since these days most of my other tax documents are still sent old school USPS.”
Consider hiring a professional.
Even if you do your taxes yourself, Eisenkraft says it may be worth it to hire a tax professional who can help you calculate your allowances and any additional amounts that may need to be kicked in during the year, as well as run some scenarios to see if filing jointly or separately works best for you. If you’re unfamiliar with the new tax laws and how they affect you or simply need guidance figuring out whether to file jointly or separately, a professional can clear things up for you in a pinch.
Discuss saving opportunities.
When you’re newly married and considering taxes for newlyweds, the last thing you are thinking about is retirement, but this is the best time to do it, according to Eisenkraft. “You have to start getting serious about it and making your contributions so they have decades to grow and be something substantial when you need them,” she says. “Sit down with your spouse and discuss what is available at the job (i.e., 401k, etc.) and how much is being contributed.”
Review your taxes when you’re done
Once you’re finished with your taxes, you might be so ready to shelf the process until you have to do it again next year, but Eisenkraft urges folks to take a look at their documents. “So many people don’t even know what they’re signing and have no idea about their financial situation!” she says. “You don’t want to end up being ignorant and not having one clue about your taxes and the accounts your spouse may have.”