The wedding planning process can truly be a whirlwind of to-dos. Finding the perfect venue, dress, flowers, cake…and the list goes on and on. Another important wedding planning item to consider is the income tax implications that will result from your newly married status. Let’s take a look at some of the main tax questions newlyweds are faced with.
When do we need to file a joint return?
The IRS determines your tax filing status based on your legal single or married status on of the last day of the year. So if you got married on December 31, 2017, you and your spouse will file your 2017 tax return as married.
Is there still a way for us to file separately?
Yes, the IRS has two married filing statuses: married filing jointly or married filing separately. Typically, married filing jointly is the most beneficial filing status for couples. However, there may be situations where a couple chooses married filing separately. The married filing separately status results in limitations and disallowance of some tax deductions and credits for both taxpayers.
Will we pay more or less in taxes?
It depends on various factors. It’s a good idea to discuss with your future spouse current tax situations, including all income (or loss) items and any liabilities that either of you may have. Combining incomes can potentially push you into a higher tax bracket, but there are situations where the opposite can occur, and you will end up in a lower tax bracket.
I think we will owe more (or less!) taxes filing jointly, what can we do now?
Your first step will be to reassess your current tax withholding or payments. If you are a W-2 employee, you may want to fill out a new form W-4 with your employer to adjust the tax withheld on each paycheck. If you are self-employed or make estimated tax payments, you will want to make sure the amounts you pay in are calculated based on your married tax rate. Keep in mind that the IRS considers you married for the full year regardless of your wedding date, so you may want to adjust your tax withholding or payments well in advance of your wedding date to ensure you aren’t subject to any underpayment penalties.
With all of the excitement of starting this new chapter in your life as husband and wife, be sure you’re not caught off-guard when it comes to your married tax situation. ATKG is here to assist you with any questions or concerns you may have.
By: Kim Pruske, CPAby