If you got married this year, the IRS won’t be sending you a card, but you might be able to get a break on your taxes. Here’s what you need to do to properly file your taxes when you’re newly married.
When Do You Count as Married?
You’re married for tax purposes if you’re married on the last day of the tax year. For virtually all filers, your marital status on December 31st determines your tax status.
If you have a December wedding, your filing status for the entire year is married. On the other hand, if you have an early 2017 wedding before you file your 2016 taxes, you still file as single for 2016.
Choosing Your Filing Status
If you’re married, you must file as either married filing separately or married filing jointly (limited exceptions apply if your spouse is a citizen of another country).
Filing jointly gives you a larger standard deduction, two exemptions, and larger tax brackets. Filing separately is similar to filing as single, but you lose the ability to claim certain deductions and credits.
Things that influence whether it’s better to file jointly or separately include
- The income of each spouse,
- Alimony obligations from a previous marriage,
- Student loans under an income-based repayment plan,
- Large medical expenses, and
- Investment income or losses.
The smartest thing to do is to calculate your taxes both ways every year because the most advantageous status often changes from year to year based on your current situation. You can switch every year if it saves you money.
While filing your taxes properly is important, it’s even more important to plan ahead to minimize your tax bill. These are the four biggest areas you need to look into:
- IRA contributions: Review the income limits for the traditional IRA deduction and Roth IRA contributions. These vary based on whether one or both spouses is eligible for a retirement plan at work. It may be advantageous to switch the type of retirement plan you contribute to.
- Healthcare: If one spouse is eligible for an employer-sponsored plan, the other may become ineligible for Obamacare subsidies or the self-employed health insurance deduction.
- Children: Your eligibility for the Child Tax Credit and other childcare credits will change based on your combined incomes.
- Withholding: You may need to increase or reduce your withholding to match your new tax status.
You should discuss these and other financial planning topics before you’re married and at least once a year to make sure you’re not paying extra to the IRS. You can use an online tax calculator or talk to your tax professional.