With tax season just around the corner, it is important that newlyweds understand how their new tax status will affect their finances.
If you were married as of December 31 of the last tax year, then you are eligible to claim yourself as married on your tax returns. Here are some simple tips, courtesy of the website The Nest, to help newlyweds ease into their new roles as marital status taxpayers.
Update Your Name and Change of Address
If you’ve chosen to take your husband’s last name, you need to get an updated Social Security card. It is important for tax filing purposes that your social security number reflects your new last name. Also, because a majority of newlyweds often move into new residences, it is important to keep the IRS informed of any changes in address. You should also make sure the U.S. Postal Service is aware of your new address to ensure proper delivery of any tax-related documents. These updates are easy to make and can be made by visiting the respective website.
Choosing the Correct Filing Status
December 31 is an important date for newlyweds, as it determines whether you are qualified to claim yourself as married for that year. When it comes to filing status, a married person has two choices: a joint return and separate returns. A joint return, or “Married Filing Jointly”, means that both husband and wife combine their annual income and deduct combined expenses on a single tax return. It is beneficial because it saves the time of having to fill out separate tax forms for both partners, allows you to claim more deductions and generally lowers the amount of taxes you have to pay.
If a couple chooses to file separately, or “Married Filing Separately”, they each file their own tax documents. You should consider filing separately if one of you has larger deductions, and it is a good way to keep your partner from incurring your financial liabilities.
Familiarize Yourself With The Method of Deductions
For tax purposes, you have two choices when deciding how to claim your deductions. You can either claim them standard or itemized. Standard deductions are a set amount that the government creates based on your filing status. All you need to do if you choose to claim your deductions via the standard method is subtract the predetermined amount from your annual gross adjusted income.
Itemized deductions are specific personal expenses such as uninsured medical costs and business-related travel. If you need help determining which method works better for you, work out the figures using both methods. If the standard deductions are greater than the itemized ones, then go with the standard method of itemizing.
Keep in mind that each year tax laws are updated and liable to change. You should always consult with your tax preparer, accountant or the IRS for the most up-to-date and current information.
