10 tax tips for newlyweds
Wednesday, June 21, 2017
Regardless of which month you marry, there are and will be tax matters to consider.
Ever wonder why June is "the" wedding month? Me, too. So I looked it up. The Old Farmer's Almanac, which I never realized was a go-to wedding planning resource, says that June is the most popular month to marry thanks to some ancient traditions.
The Roman goddess Juno, for whom the sixth month was named, was the protector of women in all aspects of life, but especially in marriage and childbearing. So, says the Almanac, a wedding in Juno's month was, and apparently still is, considered most auspicious.
The idea of June weddings also comes from the Celtic calendar. On the Cross-Quarter Day of Beltane, or May Day (May 1), young couples would pair off to court for three months and then be wed on the next Cross-Quarter Day (Lammas Day, August 1). But young hormones being what they are, the Almanac notes that the waiting period was shortened to mid-June and the popularity of June weddings was ensured.
So congrats and best wishes to all the newlyweds saying "I do" this month.
My wedding gift to you: To ensure your union is long and happy and without tax trouble, here's a collection of tax matters to take into account as and after you and your true love tie the knot.
The 10 pieces of marital tax advice also are the Weekly Tax Tip for this third full week of the marriage month and come thanks to some help from the below graphic, which was created by tax information, software and services company Wolters Kluwer.
Elaborating on some of the Wolters Kluwer tips and adding a couple of my own, here goes.
1. Pick your new filing status. As soon as the clerk or judge or clergy member said "I now pronounce you…" your filing status changed. You now are a married couple in the eyes of your state and the Internal Revenue Service. That means you no longer can file as a single taxpayer. You'll have to choose between married filing jointly (most couples choose this) or married filing separately. This change in filing status is for the whole year, regardless of whether you marry on Jan. 1 or June 15 or Dec. 31.
2. Share everything, including taxes. If you do decide to file a joint return, and most married couples do, note that makes both of you equally responsible for what's on that Form 1040. It's called joint and several liability and is found in §6013(d)(3) of the Internal Revenue Code. This statute gives the IRS the ability to come after either spouse for payment of a tax bill, even the spouse who is in more dire financial circumstances.
3. Maybe, you don't share taxes. I know, you're madly in love and nothing will ever separate you. But maybe on April 15 you should look into filing two 1040s. Concerns about joint and several liability could be one reason for opting to use the married filing separate status. You also can check out my earlier post on when it might be wise for married couples to consider the separate filling option.
4. Beware the marriage tax penalty. Or welcome the marriage tax bonus. Pledging your troth can work either way depending on the employment status of each partner and how much they make. My earlier post has the deets on marriage tax penalty or bonus situations.
5. Get tax-free financial help for the ceremony. You want your big day to be the most special ever. That's likely to mean it also will be one of the most expensive days of your lives, too. But if you have well-off and generous family (or friends), they can help by giving you cash as a gift to use for your wedding. The federal gift tax exemption allows every cash-flush person to give several thousand dollars a year (the amount is adjusted annually for inflation) to anyone without tax implications to the recipients. For 2017 that amount is $14,000. If you and your intended get such gifts from your parents and grandparents, that's a sizable sum that can be used to throw a super wedding.
6. Consider the charitable side of marriage. Did you use a nonprofit's hall to exchange your vows and made a donation to do so? It could be a tax deduction on your first joint return next year. So might donating excess wedding food or favors. Check out my earlier post on tax-smart ways to give back on your wedding day for additional charitable ideas in connection with your nuptials.
7. Take note of names. If one or both of you decide to change your name(s) after marriage, be sure to let the Social Security Administration know. File a Form SS-5, Application for a Social Security Card, to make the change. You can download the form, pick one up at your local SSA office or get one mailed to you by calling 800-772-1213. A mismatched name and tax identification number will pose some filing hassles, possible delaying a much needed refund.
8. Change your address: Are you moving into your spouse's place or finding a home new to you both? Tell the IRS about your new address by filing Form 8822. Why? As the IRS increases its closer checking of returns to stop tax crooks from filing fraudulent returns, a different address from prior filing years could set off tax identity theft processing alarms. This notification will help the IRS know it's really you but just at a new location.
9. Share the details with your workplace. Even if you didn't invite your boss to the wedding, he or she also needs to know about your address and/or name changes. That's the only way to ensure your Form W-2, Wage and Tax Statement, has correct information. And while you're thinking about it, adjust your withholding to account for your changed status. Also reassess what tax-advantage workplace benefits, like medical flexible spending account contributions, might be affected by your newly married life change.
10. Follow the tax rules regardless of gender. Since the U.S. Supreme Court's historic Obergefell v. Hodges decision on June 26, 2015, same-sex couples have had the right to be married in all 50 states. That means that gay and lesbian married couples also follow the same federal tax laws as every other married pair in the country. The IRS has a special FAQs page for same-sex married couples. Most states have also since accepted the High Court's and IRS' decisions here. But given the current political shifts, things could change. So keep an eye on what's happening in Washington, D.C., as well as in your state's capital and tax department.
I know if you're getting married this month, you're preoccupied with things other than taxes. I totally understand. So I recommend that you bookmark this post so you can come back after your honeymoon.
LOL! Yeah, those internet ad bots are weirdly imprecise.
Posted by: Kay Bell | Wednesday, June 28, 2017 at 01:22 PM
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