Don’t Forget to Put Taxes on your Wedding-Planning Checklist by Joanie B. Stein, CPA
Posted on July 31, 2019
by
Joanie Stein
Planning a wedding is an exciting time that requires attention to a myriad of details: the flowers, the dress, the guest list, the gift registry. Given this long checklist of things to do, couples often forget to consider that a marriage combining the lives of two people will affect their tax responsibilities and liabilities. Following are five steps that newlyweds should take to make their first tax-return filing less of a stress.
Step 1: Report Name Changes
If a marriage results in one or both spouses changing their names, it is imperative that they report those changes to the Social Security Administration (SSA) so that the names listed on the couple’s tax return(s) match those on file with the SSA. A delay in the processing of your tax return and refund can occur if the names do not match.
In addition, couples should take the time to report all name changes to their employers and their benefits-plan administrators, as well as the Department of Motor Vehicles, the U.S. State Department passport agency and to financial institutions and other businesses with which one or both spouses have an ownership interest.
Step 2: Report Address Changes
Couples whose marriage results in a change of address for one or both spouses should complete and file change of address forms with the IRS and the U.S. Postal Service.
Step 3: Check your Withholding
A change in your life circumstances, including a marriage (or divorce) or the birth of a child, can change your tax filing status, your tax bracket and your qualifications for certain tax deductions and credits. This information is what your employer uses to determine the amount of taxes it can withhold from your salary and pay directly to the IRS on your behalf.
Newly married spouses should conduct withholding checkups and ensure that the amount withheld for taxes matches the number of allowances claimed on IRS Form W-4, Employee’s Withholding Allowance Certificate, on file with their employers. In general, the fewer allowances an individual claims, the more money his or her employer will withhold from pay for tax purposes, and the less likely he or she will end up with a tax bill. Under certain circumstances, it may be beneficial for you to prepare a new Form W-4 with filing status as married, but withhold at the higher single rate, or for you to increase your withholdings by a certain dollar amount for each pay period in order to limit your risk of receiving a tax bill at the end of the year.
Taxpayers who need to change their withholding should complete and submit to their employers a new Form W-4, which the IRS recently redesigned to make it easier for employees to make accurate withholding beginning in 2020.
Step 4: Consider your Tax Filing Status
The IRS relies on taxpayers’ marital status on December 31 of a given year to determine whether they are considered to be married for that full tax year. Generally, the tax law allows married couples to file their federal income tax returns either jointly or separately. A tax accountant can help you determine which status is most efficient for you and your circumstances.
Step 5: Plan for the Future
Walking down the aisle are among the first steps that couples take in preparing for a new and hopefully healthy and prosperous long life together. However, preparing for the future involves a substantial amount of planning to ensure that couples can, in fact, achieve their immediate needs and long-term goals, whether that includes purchasing a home, saving for a child’s education or for one’s own retirement. Working with professional advisors, including accountants and attorneys, couples should review and update their wills, medical and financial powers of attorney and develop marital estate plans to help them maximize wealth preservation while minimizing their tax liabilities.
About the Author: Joanie B. Stein, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where she works with individuals and closely held businesses to implement sound strategies that are intended to preserve wealth and improve tax-efficiency. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.
Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service.
← Previous
