Recently got married? Here are the things you should know and do before you file your taxes
Let’s be honest: Taxes are the worst. Or, more accurately, tax season is the worst. This is especially true for folks who have recently gotten married. That’s because, unlike the good old days when you were able to look through your own paperwork and submit singularly, now you have to think about the way your spouse (and their income and deductions) come into play. And, with extra paperwork and numbers in the mix, it’s even easier to accidentally miss something.
To help ensure that no key detail goes unseen, we chatted with Credit Karma VP and financial advocate Dana Marineau and Taxfyle CEO and cofounder Richard Laviña to teach you the most important things to remember when filing taxes as a married couple for the first time. Commit these tips to memory and you might just find that tax season is a whole lot more manageable. You can thank us later.
How to file taxes as a married couple
1. Get organized and start the process.
The best way to make taxes less stressful is to go into the process fully organized. “Take the time to gather all tax-related documents before you sit down to file your taxes,” says Marineau, calling out W2s and receipts. “It may sound obvious, but you’d be surprised how much time you can save if you have all of the necessary paperwork in front of you when you go to file.”
Once you have everything organized—even if it’s well in advance of April 15—you might as well start the filing process. “There are many benefits to filing your taxes early and not waiting until the last minute,” Marineau reminds us. “For starters, if you expect to get a refund this year, the sooner you file, the sooner you’ll have money back in your pocket. That also means you can get a jumpstart on paying down debt or building your savings. And, if you wait until the last minute, it may cause unwanted stress.” In other words, she says to start the process now so you can file your taxes on your own schedule.
2. Update your name with your local Social Security office.
If you decide to take your partner’s last name (you totally don’t have to), Laviña says to be sure to update your name with the local Social Security office before you do your taxes. “Not doing so can result in your return being electronically rejected due to the fact that your new name and social security number will not match,” he explains.
There are a few ways you can update your name with the Social Security Administration: you can visit your local Social Security office, call by phone at 1-800-772-1213, or visit the Social Security website at ssa.gov.
3. Educate yourself on the different filing statuses.
One of the first boxes you’ll encounter on an income tax return is your filing status. “It’s important to pick the right one for your situation because this choice affects the amount of taxes you’ll pay, the standard deduction you can take, and any tax breaks you’re eligible to claim,” Marineau explains.
Fun Fact: According to Credit Karma, “Out of the nearly 153 million federal returns filed in tax year 2018 (for 2017 taxes), more than 54.7 million returns were filed under a status of either married filing jointly or qualified widow, both of which offer the same tax rates, according to the IRS.”
While filing jointly usually results in a lower tax bill and easier process, Marineau says that some married couples may find it to their advantage to file separate returns based on their tax situation. She says to consider filing separately if you want: to get a lower student loan repayment (if your repayment is income-based), to keep tax liability separate, to protect your tax refund, or to account for a big difference in your incomes or deductions.
Just keep in mind that, according to Marineau, filing jointly as opposed to separately often means getting a bigger tax refund or having a lower tax liability. “You may also qualify for other tax benefits that do not apply to the other filing statuses, and your standard deduction is higher,” she adds.
4. Determine if you were married in time to file jointly.
If you’re thinking about filing jointly, you just have to make sure that you were married in time to do so. “When it comes to filing your taxes, the IRS won’t care if you got married on the first day of May or the last day of December—it will consider you married for the entire year as long as you’re married by December 31st of the tax year,” Marineau explains.
5. Find out if your spouse owes back taxes.
Every year, we’re given the opportunity to pay taxes by April 15th or file for an extension to get six extra months to help make ends meet. Sometimes, however, even with an extension, it can be difficult to pay for everything that’s owed. When this happens, back taxes come into play. In short, they’re any taxes that weren’t paid in the year that they were due.
Since back taxes accumulate interest and, at a certain point, can even affect your credit score, it’s very important to know whether or not you or your spouse owe back taxes.
“If your spouse owes taxes from before the tax year you were married in, but you have decided to file jointly, it is recommended to file Form 8379: the Injured Spouse Allocation form,” Laviña explains. “This form essentially separates your spouse’s liabilities and past IRS debts from you.”
6. Consider lowering your tax bracket.
As we mentioned, as a married couple, you have the option to file together or separately. While maintaining your financial independence might be important to you, Laviña points out that sometimes it’s better to file jointly. “Depending on your incomes when calculated together, filing with your spouse may make your tax bracket lower, reducing your overall taxes,” he explains. “This typically depends on how different the salaries are from each other but can be incredibly beneficial if you or your spouse earns substantially less.”
And, speaking of tax brackets, keep in mind that it’s not so much the brackets themselves that always offer the biggest savings when you’re married and filing jointly on a tax return. For instance, if you have two people who both make $50,000 and they both took the standard deduction (which is around $24,800), even when they’re married, they’ll be in the same tax bracket when filing jointly and have the same rates and double the standard deduction, so the tax amount will remain nearly unchanged.
Since everyone’s situation is different, it helps to determine your tax brackets in advance. To do so, visit debt.org for more information.
7. Check your allowances and withholdings.
When you get married, your household gets bigger. As such, you can increase your number of allowances from one to two—one for each person. “If you have children, you can claim even more allowances,” Marineau explains. “Typically, the more allowances you list, the less tax that’ll be subtracted from your paycheck, which means more money in your pocket.”
That said, you want to avoid withholding too little or too much. “You may need to have more tax withheld, or less than you did before you were married,” Marineau explains. “If you’re unhappy with the refund you’re likely to receive, go to the IRS paycheck withholding calculator.”
8. Keep track of which deductions you qualify for.
A big factor to consider when deciding whether or not to file together are deductions. “Filing jointly as a married couple might prohibit you from claiming various deductions and credits,” Laviña explains. “Be sure to calculate every possible tax scenario carefully to make sure you don’t end up losing money.”
Pro Tip: The Tax Policy Center has a Marriage Bonus and Penalty Tax Calculator to help you compare the taxes you would pay filing a joint return versus filing separate returns.
9. Be wary of the “joint and several liability.”
If you’ve never heard of this, it’s because it’s a liability that only comes into play once you’re actually married. According to Laviña, the “joint and several liability” essentially instates that each spouse is responsible for whatever taxes are owed, as well as whatever penalties or interest arises as a result of a joint return. “This is particularly important to keep in mind if either you or your spouse do not earn any income as you will be liable for the taxes owed jointly regardless,” he says, noting that once you sign and file a joint return, you will be jointly liable.
10. Put your refund to good use.
Now that you’re married—and especially after filing taxes—you might have finances on the brain. That said, if you’re expecting a refund this tax season, there are a few ways to make the most of your refund. Marineau recommends putting the money into a high-yield savings account.
Another option is to pay down your debts. “Putting money towards things like your credit card or student loan debts means you’ll pay less in interest charges every month, leaving you with smaller payments,” Marineau explains.
You can also contribute to your retirement fund. “It’s never too early to start saving for retirement,” Marineau points out. “The earlier you start, the more time you’ll have to build up your retirement savings and benefit from the magic of compound interest.
Then there’s the charitable option to make a tax-deductible donation. “If your personal finances are in good shape and you’re feeling generous, you can donate some of your tax refund to a charity and potentially deduct the charitable donation from your taxes,” Marineau concludes.
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