A Couple Tax To-Do’s, before saying I Do, Can Make for a Great Wedding Gift
Leading Tax Attorney shares Pre-Wedding Tax Tips for Couples
Planning a wedding can be extremely stressful. Between finding the right dress, flowers, venue, band, dinner, cake, bridesmaids, groomsmen, invitations, and a seemingly endless “to-do” list, it is easy to lose sight of planning for what comes after the big day.
“Planning for taxes, on top of all the other wedding plans, isn’t terribly romantic,” said Venar Ayar, principal and founding tax attorney for Ayar Law Group in Southfield, Michigan. “If you keep Uncle Sam on your list, and can take care of a few tax items before you tie the knot, it could pay off come tax time by helping keep your new combined taxes lower.”
Whether you’re planning to get married this summer, in the fall, or sometime in the future, there are countless considerations to be made when making a lifelong commitment to someone, many of which will impact your tax filing. Here are some tax tips from Ayar Law Group to help couples plan for that happily ever after:
- Change of Name: Social Security Administration records must be consistent with all the names and Social Security numbers on your tax return. If you change your name, report it to the SSA. In order to do that, file Form SS-5; Application for a Social Security Card. You can download the form at SSA.gov. You can also call the SSA at 800-772-1213 to order it or get it from your local SSA office.
- Change Tax Withholding: The withholding rate for those who are married is lower than for those who are single. Some married people find that they do not have enough tax withheld at the married rate. For instance, this may happen if both you and your spouse are employed. To determine whether or not you should consider a change of income tax withholding, use the IRS Withholding Calculator tool at IRS.gov. Should you come to the conclusion that you want to change your tax withholding, give your employer a new Form W-4 which can be found at IRS.gov/forms along with any other IRS forms and publications.
- Change in Circumstances: If you receive advance payments of the premium tax credit you should report changes in circumstances, such as your new marital status, to your Health Insurance Marketplace. Other changes that you should report include those in your income or family size. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes in circumstances will allow the Marketplace to adjust your advance credit payments. This adjustment will help you avoid getting a smaller refund or owing money that you did not expect to owe on your federal tax return.
- Change of Address: If you move, you need to inform the IRS of your new residence. In order to do that, simply file Form 8822, Change of Address, with the Internal Revenue Service. If you haven’t already done so, you should also notify the U.S. Postal Service. You can change your address online atUSPS.com or report the change at your local post office. It also goes without saying that you will need to change your address on any identification cards as well (driver’s licenses, passports, etc.)
- Change in Filing Status. If you are married as of Dec. 31, for tax purposes, that is your marital status for the entire year. You and your spouse may opt to file your federal tax returns jointly or separately each year. The smartest route to take is to consult with a tax professional (or use tax software at home) and figure the tax both ways so you can choose the status that results in the least tax owed. Additionally, if your earnings or circumstances vary year to year it is also wise to recalculate the numbers and reassess your options each year; depending on your income (and other variables) what worked the previous year may not be the most optimal choice when dealing with different factors any subsequent years.
These considerations, on top of everything else, may seem a bit daunting, but most of the items on this list don’t actually need to be dealt with until after you’ve said “I Do”. If you plan for these in advance, they will reduce stress and a few of them may actually save you and your new spouse money… and money always makes a great wedding gift.
About Ayar Law Group
Ayar Law Group, an award-winning, boutique tax law firm, represents individuals and businesses with tax problems that require creative resolutions. Because our focus is exclusively on tax problem resolution, we have the experience and knowledge to minimize clients’ financial exposure and protect their assets whether those assets are in the United States or abroad. Our offices are located in Southfield, Detroit, Troy, Novi, and Farmington Hills, Michigan. For more information, visit www.ayarlawgroup.com