Photo: Flickr / JackSim
You’re still hearing wedding bells, but don’t let the honeymoon phase distract you from reality.Money is a huge factor in relationships and if you don’t tackle it from the start, it can start to shake the cornerstones of your marriage.
Kathy Pickering, the executive director of The Tax Institute at H&R Block, names a few things newlyweds should be aware of come tax time:
A newly married couple has two filing status options, married filing jointly or married filing separately; however, a joint return often results in a lower federal tax. That said there are some cases where married filing separately does make sense.
For example, if you have relatively high medical bills and lower income, it may be best to file separately. Medical expenses can be included in itemized deductions, but are only deductible to the extent they exceed 7.5 per cent of your adjusted gross income.
If you have very high medical expenses and a low adjusted gross income, filing separately means you could deduct more of these expenses. However, if you filed jointly, you may not benefit from this deduction.
Other things for newlyweds to pay attention to:
Whether you took your husband’s last name or hyphenated your name, you must report your name change to the Social Security Administration (SSA). To avoid any delays or problems at tax time, your name and social security number on your tax return should match the records the SSA has.
Adjust Income Tax Withholding:
If you and your husband work, your joint income may put you in a higher tax bracket and increase your total tax liability. You should make any necessary withholding adjustments for the next year by filing a new W-4 form with your employer.
Use the withholding worksheet to indicate whether your spouse works and how many dependents you have, which determines the number of allowances to claim and the amount of income tax employers will withhold from your paychecks.