Getting married usually triggers a multitude of changes to your life, but one change that you may not have considered is how marriage affects your taxes. For example, your tax filing status may change, most often from filing single to married filing jointly. When it comes to taxes and marriage, here are some things you should consider:
If both spouses earn wages, you’ll want to review your withholding rates, which may need to be adjusted to account for your new joint filing status. With a higher combined income, you may be bumped into a higher tax bracket and may find yourselves subject to the 0.9% additional Medicare tax.
MARRIED FILING SEPARATELY
While most couples benefit from filing a joint tax return, some may benefit from filing separate returns. This is known as married filing separately and can help when one spouse has significantly more income than the other, or if one person has sizable medical expenses.
Make this decision with your tax professional because married filing separately has its drawbacks, including losing the ability to claim certain tax credits.
TAX-FAVORED BENEFITS
Be sure to review your workplace benefits now that you’re a couple. Marriage is a life change that generally allows you to make plan modifications immediately, instead of waiting for the next open enrollment period.
Considerations include coordinating health care coverage and flex spending account contributions. Just like your tax withholding, you’ll need to analyze how these tax-preferred benefits fit into your new lifestyle.
And don’t forget to update beneficiary information on your retirement accounts and insurance policies.
Of course, you know that it is important to work together on your finances and agree on financial priorities. Also, work with a financial and tax professional from the start to help make the most of your finances.