5 Tax Planning Tips For Newlyweds
Getting married and walking down the aisle comes along with a great deal of planning. However, just because the honeymoon is over, it does not mean the planning work is too. As a newlywed couple, there are several tax planning steps you need to take in order to set yourself up for success.
1. Have a Money Talk
Sit down and have a no-secret money talk with your partner. To ensure you know how to strategize, you need to know what each person makes, what other income they have coming in, what assets they own, and any other financial matter that might affect their tax status. You can only make a plan if you know what you have, so it is essential for you both to be transparent.
2. Weigh Filing Options
Do not automatically assume that married, filing jointly is the right option. For some couples, it is better to file separately or even as head of household. Once you have all your financial data collected and organized, sit down with a tax professional to review your information and determine the right filing status.
3. Notify the Authorities
Make sure you let the government know you are married before you file your taxes. If you fail to notify them and attempt to file your taxes together, the system could reject the return and lead to all sorts of delays. Presenting your marriage license to the Social Security Administration to change your name will initiate this process.
4. Review Withholdings
When you have your meeting with your tax professional, you should also ask about your withholdings, as you might need to adjust the amount now that you are married. You might have qualified for fewer withholdings with your income alone, but once you combine your spouse's income, it could put you in a higher tax bracket, prompting more withholding.
5. Research Credits
Perform a search online to learn more about any potential tax credits you and your spouse might qualify for. The reason it is important to research is that the IRS often requires certain proof or evidence before you can receive the tax credit. Planning ahead ensures you have everything you need to show you qualify for the credit so that it is not rejected when you file your taxes.
Follow these tax planning tips and meet with a tax planning service, such as Golden Tax Relief, for assistance to ensure you are ready to file your taxes as a married couple.