Getting married should be one of the happiest events of your life. But even if everything goes perfectly on your special day, the IRS may spoil the party — or give you a late and unwelcome wedding present.
That’s because getting hitched means big changes on your taxes, not the least of which is having to decide whether you and your new spouse want to file jointly or separately, which can have a big impact on the tax rates you’ll pay as well as which deductions and credits you’re entitled to.
First of all, the IRS looks at your marital status on the last day of the year. So whether you got hitched right after the ball dropped on Jan. 1, 2011, or you waited until New Year’s Eve to tie the knot, you’ll need to file as married.
As you start gathering tax forms and combine your finances for the first time, here are some things to consider:
- The infamous “marriage penalty” hits many couples, but definitely not all of them. You’re most likely to face a marriage penalty if both spouses work and earn similar pay. Single-earner families, on the other hand, often see a tax benefit from marriage.
- Most married couples should change the way they have taxes withheld from their paychecks. By filing a new Form W-4 with your employer, you can adjust your withholding to make sure you don’t have too little (or too much) tax withheld.
- Usually, filing jointly makes the most sense, as filing separately makes you ineligible for certain valuable tax credits, including those for child care and education as well as the Earned Income Tax Credit. But occasionally — such as when one spouse has major medical expenses — filing separately can save you money.
- Make sure the IRS has up-to-date information about you. If you’ve moved into a new home, Form 8822 informs the IRS of your new address. For name changes, you’ll want to fill out Form SS-5 to keep both the Social Security Administration and the IRS up to speed on your new name.
Finally, marriage may give you extra savings opportunities. For instance, most people who don’t work can’t open IRAs, but a nonworking spouse can open a spousal IRA. Doing so is a great way to help you prepare for your long-term retirement goals.
So if you’ve recently married, congratulations! With these tips, hopefully the IRS will give its blessing to your union as well.
More on taxes:
- Why You Shouldn’t Cheer IRS Budget Cuts
- More Reasons Why You Could Pay More Tax
- Do You Have to Pay Tax on Credit Card Rewards?
Tagged: child care credit, ChildCareCredit, Earned INcome Tax Credit, EarnedIncomeTaxCredit, education credit, EducationCredit, Form 8822, Form SS-5, Form8822, FormSs-5, Getting Married, IRS, marriage