The Complete Guide to Filing Options for Newlywed Taxes
Making the transition to married life comes with more than a “just married” sign: It also comes with newly wed taxes. The new filing status can cause a lot of confusion for a newly married couple.
The IRS gives specific guidelines on who can file as head of household, jointly, and separately. There are rules for dependents, name changes, and address changes. Mistakes can cost time, effort, and a good chunk of income. It’s easy to understand how so many people get confused.
You are eligible for 2021 tax purposes to file as a married couple if you were married before December 31. That’s the first step. The next is having all your legal documentation in order before it’s time to file. This guide will walk you through everything you need to know about taxes for newly married couples.
Taxes for Newlywed Couples
Choosing Your Filing Status
Choosing to file jointly or separately is one question that every couple will face. Taxes for married couples are a little more simple to understand, though, with the right knowledge of how each status benefits you.
Married Filing Jointly
When couples file jointly, the IRS offers several tax benefits. Filing jointly can make them eligible for additional standard deductions and tax credits such as the Earned Income Tax Credit and the Child and Dependent Care Tax Credit, for example. Combining incomes may increase itemized deductions.
Another reason to file jointly is that couples are typically eligible for larger refunds because the income threshold is much higher for a couple filing jointly. This could put them into a lower income bracket, and the couple may be able to claim more deductions.
Married Filing Separately
It may not always make sense to file jointly; separate tax returns can be a better option in some cases. Here are a few reasons filing separately may be best for you:
These issues are the main reasons why a married couple might file separately, but they’re not the only ones. Expert tax help can steer you in the right decision.
When You’re Going Through a Divorce
Filing jointly while going through a divorce can lead to unforeseen tax liability. It’s beneficial to file separately to avoid footing the bill for your partner’s tax debts.
Choosing to file separately may make the most sense for you and your spouse in these cases. Preparing both types of tax returns is one way to check which approach is better, allowing you to identify how to get the highest tax refund.
Filing Tax Returns for International Partners
Filing your tax return will look a little different from usual if your spouse is not a U.S citizen. You have two options for how to approach your spouse’s filing status.
Tax law is complex, and it can be challenging to choose whether you should file jointly or not. Consult with a tax expert if you are unsure and want to take advantage of the tax benefits you’ve got coming to you.
Filing Taxes as a Civil Union
A civil union is legally recognized as a marital arrangement with the same rights and responsibilities as married people. Its primary purpose is to give legal recognition to same-sex couples. Here’s what to keep in mind:
Another common question many same-sex couples have regarding their taxes is how to handle dependents. Children of the couple may be claimed on one taxpayer’s return, but not on both, as long as the child qualifies under IRS section 152c. This states that a qualifying child must have a particular relationship with the taxpayer, be of a specific age, and live with the taxpayer for over half of the year. Staying the summer with another parent or grandparent is not an issue. Same-sex couples also are not permitted to claim their partners as dependents.
Changing Personal Information After Marriage
When you get married, a lot of information changes. Many people choose to change their name, and couples often relocate to a new address. Both changes can impact your tax return and require a few extra steps to take care of.
Name Changes and Your Tax Return
Those who choose to change their name after marriage should be aware that they’ll need to do more legwork when filing their return the first year. The name on your tax return needs to match the name on your Social Security card or the IRS will reject it, and you’ll be back at square one. You also:
Remember to have your marriage license, new Social Security card, and driver’s license with your new name when you file your taxes.
Change of Address on Your Return
Changing your address on your tax return is a simple process: You just need to complete a Change of Address Form and mail it to the IRS. This will help the agency update its system to display your personal information on your form accurately.
Failing to notify the IRS of your address change could delay your refund check. It can also cause your check to be sent to the wrong place.
Stay on top of updating the government about personal changes after marriage to avoid confusion and delayed returns. A good rule of thumb is to change your address as soon as you’ve moved the last box. Don’t wait to unpack.
Deaths and Divorces
Spousal situations associated with a new marriage, such as death and divorce, can cause further complications in filing your return. In these situations, it can be tricky to know how to file. Here are some guidelines:
When a Previous Spouse Passes Away
You are still considered married to your spouse for the entire year if your previous spouse passed away during the last tax year. You can still file either jointly or separately in this case. The IRS asks that you write “filing as a surviving spouse” next to your name in the signature line if there is no personal representative present to sign for the deceased spouse. Things are a little different if you remarry in the same year, however. You will not be able to file jointly. A representative would separately file on behalf of your deceased spouse.
When You Divorce During a Tax Year
You will still be able to file using the “married” status if you are only separated. It will be up to you and your spouse to decide whether to file jointly or separately. You can choose to file either as head of household or as single if you are divorced. Anyone filing as the head of household must be the custodial parent of any children. You can also file as head of household if you paid for most home expenses during the year.
Alimony Tax Deduction
Alimony was eliminated as a tax deduction as of 2019, so it is no longer a deduction or reportable income.
No one wants the hassle of tax troubles when dealing with these difficult situations. A tax attorney can take the guesswork out of the predicament and get you the best return.
Newly Married Tax Advantages
There are some wonderful advantages to getting married, besides true love and companionship. The IRS provides some benefits to people who say “I do,” such as:
A married couple is allowed greater deductions for charitable donations. Charitable contribution deductions can be no more than 50% of your income, typically. Being married raises the limit. The amount depends on filing status and the amount of the contributions.
Faster and Cheaper
This one is a no-brainer. Two people filing one return takes less paperwork, time, effort, and cost.
A married person can bequeath all their wealth to their spouse when they die. This keeps the federal government from generating an estate tax until the surviving spouse dies.
Married couples who both have benefits packages from their jobs can usually pick and choose which benefit they want from each plan. One spouse often has a better package than the other in some way. Choosing benefits like this can result in tax savings, such as a dependent care flexible spending account (FSA), which directly lowers a couple’s taxable income.
There’s a lot to consider when it comes to taxes for newly married couples. It’s easy to overlook a detail or check the wrong box, leading to tax problems that can make you miserable for years. Get help from a professional if there’s anything about your new filing status that you’re unsure about.
Professional Tax Help When You Need It Most
Getting married goes hand in hand with a lot of changes, but it doesn’t have to lead to tax confusion. Silver Tax Group has assembled a team of experienced tax attorneys who will assess your options and get you the most favorable outcome – even if that means having to defend you against IRS actions.
Here Are 12 More Things Every Newlywed Couple Should Know
1. Pay A Visit To Your Social Security Office
Your marital status gets determined on December 31 of the year you are filing for. So, if you got married on December 30, 2019, you will get considered married for that year when you do your taxes in April.
The IRS may delay processing your tax return if your name changed and they were not notified. They may also deliver it to the wrong address.
You will only need to pay a visit to your local Social Security office if you are the one changing your name. A new social security card can serve as proof for changing your name on your license. This can, in turn, get used as proof for changing everything else, including utility bills, banks, and credit cards.
In order to change your name on your social security card, you can visit your local social security office or find the form online and bring it in.
You will need evidence of your age, such as a birth certificate or adoption certificate. You should also bring photo identification such as a driver’s license or passport. You will need your marriage certificate.
Your new card will get mailed to you, sometimes within a few days. Getting it before applying for any other documentation can save you a lot of time.
2. Update Your W-4 With Your Employer
Your W-4 is the form your employer uses to determine how much tax they will withhold from your paycheck. When you are single, you can only use one for yourself. After you get married, you can take one for both yourself and your spouse.
Adjusting allowances could allow you to avoid overpaying taxes throughout the year. If you have too much tax withheld, you may not get your money when you need it. If you withhold too little, you could get an unpleasant surprise at tax time.
Claiming an additional allowance or changing your withholding to the “married” rate on your W-4 means that fewer taxes will be withheld from your pay.
Your W-4 is not likely to stay the same after you get married. Talk to your tax accountant or tax attorney if you need help filling it out.
3. Tell The IRS About Your Change of Address
The IRS will now send your tax returns to your new address. If you neglect to change it with them, your tax refund check could be sent to the wrong home.
Fill out form 8822 with the IRS. If you change your address before filing your return, enter your new address on your return when you file. If you change your address after you file, notify the post office that services your old address.
You can also write to the IRS to provide you with your new address. You will need to supply your full name, new and old addresses, social security number, and signature.
4. Choose Between Filing Jointly and Filing Separately
Once you get married, you may choose two options when you fill out your return. You may select from “married filing jointly” and “married filing separately.”
If you were single and are now filing jointly, most calculations will get doubled. In almost no situation will you save money on your taxes by filing separately. There are, however, a few cases in which this may benefit you.
In most cases, filing jointly will save you the most, since the IRS views each spouse as earning half of the total income. This will keep more of your income in lower tax brackets.
Filing jointly will also raise the limit of the charitable deductions that can get deducted throughout the year. Your spouse’s income will count in determining your deductible amount. You will also only have to deal with the hassle and expense of filing one return.
Filing separately as a married couple could prohibit you from claiming deductions for student loans, tuition, fees, education credits, and earned income credits. You could reduce your tax refund or raise your tax bill by thousands of dollars.
5. When To File Separately
It may be to your benefit to file separately if either your spouse or yourself have enough tax deductions to itemize the return. These deductions may include medical or business expenses.
When you itemize, your spouse gets required to itemize as well on a joint return. This may mean you could miss out on the Tax Cut and Job Act’s standard deduction. If your tax deductions are big enough, it may be worth it to file separately.
You may also wish to consider filing separately if you live in a community property state. In these states, all assets acquired during marriage get considered “community property.”
Marital property in community property states are owned by both spouses equally (50/50.) This includes all earnings, all property bought with these earnings, and all debts accrued during the marriage.
If you live in a state like Arizona, California, Idaho, Nevada, New Mexico, or Wisconsin, there is a complicated set of rules that determine what is community and what is marital income.
The rules for community property vary among the states. Your combined income might be split between your returns if you file separately, thus negating your intent.
Before determining how you should file, speak to a tax accountant about the rules in your area. You can also use tax software to try filing separately and together, and see which method saves you more money. This may take an extra hour or two of your time, but it will be well worth the effort.
6. Prior Debt
One reason married couples may choose to file separately is that one of them has prior debt that is past due and can get deducted from their taxes. This includes overdue child support, past-due loans, or tax liability.
Yet filing separately over past liens may not be necessary. The spouse without debt can file an Injured Spouse Allocation Form each year with their married-filing-jointly tax return.
This will keep the spouse who doesn’t have debt from getting penalized on their tax return and losing their share of the tax refund.
The couple can still declare deductions and credits that they could not get by filing separately.
7. The Risks of Filing Jointly
When you file jointly with your spouse, you will be considered equally at fault for any errors or intentional omissions. You will also be responsible for any additional tax, penalties, and interests that arise from that mistake.
If the IRS catches a discrepancy, you will likely both get held liable. You will get required to help pay back any outstanding balance, plus interests and penalties.
The IRS can look for you to pay back the balance even years after you have divorced your spouse. It may be possible for the IRS to drop your liability for fraud committed by your spouse. You will need to file for Innocent Spouse Relief and prove you didn’t know about it.
As a married couple, it may also be more difficult to meet the minimum percentages of income necessary to deduct medical expenses, unless one or both of you has significant expenses.
In addition, a fund could get delayed or blocked if your spouse has an unpaid loan or child support.
8. The Benefits Of Married Filing
When one spouse makes more than the other, the spouse with the higher income may get moved to a lower tax bracket since each partner is considered to make half of their total income.
Married couples filing a joint return get to claim two personal exemptions on the tax return instead of the one exemption allowed when you file as an individual.
The standard deduction allowed on a tax return is the highest for married couples filing a joint return. The standard deduction as of 2019 is $12,200 for individuals and $24,000 for married couples filing jointly and surviving spouses.
If one spouse doesn’t work, they will now be eligible for an IRA (Individual Retirement Account.) They may not even have thought about saving for retirement previously. In addition, the point at which the IRA benefits begin to phase out is much higher for married couples than it is for single people.
Couples who marry have the advantage of choosing the best benefits from each of their employers. This can help you increase your savings on tax day.
If, for example, the couple has dependent children, they can benefit from using plans such as dependent care plans. One spouse may have this as part of their benefits package, while the other one does not.
If you or your spouse make large charitable contributions but doesn’t have an income of at least double that amount, the excess contributions get carried over into the next year.
If you file the return jointly, it will add to the generous spouse’s income in determining the deductible amount. This will allow them to save more right away.
9. Estate Protection
Marriage can also help protect the estate of a wealthy person after they die. Under federal law, individuals are permitted to leave any amount of money to a spouse without generating an estate tax. The exemption protects the deceased’s estate until the spouse dies.
10. Buying Or Selling A Home
When you get married, you and your spouse may choose to purchase a house a home with your combined incomes. When you sell a home, the interest you pay on a mortgage payment is deductible on your tax return as an itemized deduction.
If you are selling your home as a married couple, the amount of gain that can get excluded from your income doubles. If, however, only one of you owned the home before you got married, the higher exclusion only applies if both of you lived in the home as your primary residence for at least two years before you sold it.
11. Dependent Children
You and your new spouse may be dreaming of starting a family together, or your spouse may have a child from a previous marriage or relationship. You are eligible for a tax credit of $2,000 per qualifying child.
Any child who is your biological child, stepchild, foster child, sibling, stepsibling, or descendant of these individuals can be dependent. The child cannot turn nineteen at any time during the tax year. This age increases to twenty-four if the child is a full-time student.
When you are figuring out the amount of financial support to claim on your taxes, you can include a portion of your housing expenses as well. If you have a spouse and another child, for example, 25% of your housing expenses are for the support of the child.
Your child needs to be a U.S. citizen and resident in order to qualify.
12. Don’t Forget About These 4 Tax Write-Offs for Your Wedding
As you plan your upcoming wedding (congratulations, by the way!) you probably aren’t thinking about, well, taxes.
But you should be! There are some key tax write-offs for weddings that you may be missing out on, and we want you to take advantage of every tax issue you can.
The best part? You get to actually feel good about what you are doing. All of these write-offs include donating what you have to organizations that help others, so you are helping yourself and helping others.
1. Donate Your Wedding Dress
There are philanthropies dedicated to collecting and distributing gently used gowns to those who can’t afford them on their own!
Consider Making Memories, a foundation dedicated to helping women with breast cancer.
You can also donate it to a local second-hand shop, just make sure that it is technically a nonprofit before doing so. Just ask them if they are a 503-c and they will know what you mean.
2. Photography, Decorations & Flowers
Definitely make sure to keep all of your receipts for the wedding photography, flowers, and decorations! You can donate your tealights, centerpieces, etc, to a local Salvation Army or Goodwill and write it off as a donation up to the fair market value of each item! You will definitely need a receipt from the organization you choose to donate to!
Consider donating your flowers to a women’s shelter or a similar nonprofit; that way their beauty can be appreciated before they wilt and you get a write-off.
3. Host Your Wedding in a Non-Profit Venue
If you host your ceremony or reception in a house of worship, a historic building, a garden, museum, state or national park, your site fees can be written off as deductible donations.
Say you are hosting your ceremony at a church. If their services aren’t set up so that you can use it as a tax write-off, see if you can make a large donation instead of paying your ceremony fee. Never hurts to ask!
4. Donate Your Extra Food
Chances are that your guests won’t actually eat all of the food that you have. Luckily, you can always donate it to a nearby homeless shelter.
This one takes a little bit of extra work. You are going to need to keep and record all of your receipts and contracts with your caterers so that you can actually calculate the value of the food you donated.
We recommend you coordinate with both your caterer and the organization you are donating to beforehand. It’s always better to figure out the details earlier rather than later!
Tax Help For Newlyweds
Your taxes after marriage are not likely to stay the same. You will need to change your documents and decide if you should file jointly or separately. Many couples enjoy an improved tax status after they marry.
For more information on taxes for newlyweds, contact us today.