Getting married is a life-changing experience. You and your spouse may have to adjust your lifestyles, especially financially. One of the biggest financial adjustments is filing taxes differently. You’re no longer considered single, and you may opt to file jointly with your spouse. The type of tax return you opt to file once you’ve gotten married will likely impact your overall return. Here’s an overview of things to consider before filing your first tax return after getting married.
Determining Status
The IRS states that you must get married before the last day of the tax year that you and your spouse are filing jointly as a married couple. Your status at the end of the year determines if you have been married for the entire year. You will also have to decide if it’s more beneficial to file separately or jointly. Your decision impacts whether you will receive thousands of dollars more or less on your tax return. That makes a difference if you and your spouse are still budgeting.
Potential Tax Penalty
It’s recommended that you research potential tax penalties. Sometimes married couples end up paying more taxes than they would if they stayed single. These types of penalties generally occur when parts of the federal tax code differ between married and single taxpayers. For example, there could be a penalty regarding estate taxes. According to federal guidelines, with estates over $10,800,000 for married couples and $5,400,000 for single people, any extra amounts over that will be subject to estate taxes. Recent federal legislation has attempted to minimize the impact of marriage penalties. In unique cases, you and your spouse may receive a filing bonus. This means you will be paying less taxes while married than you would have if you were still single. Normally, penalties occur when both spouses have high-level incomes that are equal. A bonus is more likely to occur when the higher-earning spouse moves down to a lower tax bracket as a result of filing a joint return.
Employer Changes
Getting married may cause your employer to adjust your benefits. It’s recommended that you look over your current benefits. Perhaps there’s an opportunity for you to join your spouse’s coverage, which in turn allows you to explore potential new benefits. It’s also recommended that you look over your last tax form to see the amount of federal income tax your employer is withholding based on filing status, deductibles, and credits. Your employer may make some adjustments.
Potential Liens
Research shows that the average marriage length in the United States is just over 8 years. For that reason, many married couples continue to file taxes separately. Another key reason that some married couples opt to file taxes separately is if they still have debt, which may be deducted from their refund. Some of the common debt deductions include child support and student loans. Another option if you have outstanding debt is to file through Form 8379, which allows you to file jointly with your spouse until your debt is caught up. Form 8379 protects your spouse from losing their half of the tax return because of your debt. Filing jointly also allows you to declare credits and deductions that you miss out on filing separately.
Possible Exemptions
Filing separately while married may exempt you from claiming student loan interest deductions, tuition, education, and earned income credits. You may also be limited in terms of taking itemized or standard deductions. It’s also recommended that you pay attention to your utility bills. Many financial advisors note that your monthly rent and utility bills should not be higher than 30% of your monthly income after taxes.
Getting married changes your financial situation. It’s important to learn as much information as possible to maintain healthy finances. Remember these tax tips if you’re getting married.
