SOUTHFIELD, Mich. – Planning a wedding can be extremely stressful, and upcoming tax-related changes are probably the last thing on couples’ minds. But there are many things couples need to consider and plan for when making a lifelong commitment to each other.
“Between finding the right dress and picking the right flowers, couples still need to make time to plan for what comes after the big day,” said Venar Ayar of Ayar Law Group. “Where do you want to live? How many kids do you want to have? Are you going to hyphenate your name? These are just a few of the many questions couples must answer when preparing to tie the knot.”
There are many tax-related decisions couples must make when getting married, including change of name, change of tax withholding, change in circumstances, change of address and change in filing status.
First, Social Security Administration records must be consistent with all the names and Social Security numbers on tax returns. Therefore, couples must decide if there is going to be a change of name and what kind, and make sure to have it legally changed and reflected in all important documents to avoid any future issues.
Also, the withholding rate for those who are married is lower than for those who are single, and some married people find that they do not have enough tax withheld at the married rate. To determine whether or not you should consider a change of income tax withholding, use the IRS Withholding Calculator tool at IRS.gov. If you want to change your tax withholding, give your employer a new Form W-4 (which can also be found at www.IRS.gov
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. Reporting changes in circumstances will allow the Marketplace to adjust your advance credit payments to help you avoid getting a smaller refund or owing money that you did not expect on your federal tax return.
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.
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.
This – 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.” Some of them will only take but a few minutes and may actually save you and your spouse money as you begin your new life together.
About The Ayar Law Group
The Ayar Law Group specializes in helping individuals and businesses solve their tax problems. Our Michigan tax attorneys serve all of metro Detroit and the greater Southeastern Michigan area. Our narrowly-focused tax resolution practice gives us the specialized knowledge and experience we need to fully understand the nature of, and best possible solutions to, each and every individual and business tax problem. www.ayarlawgroup.com
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