Marriage is an important milestone in many people’s lives. Yet, while starting a new life together can be exciting, it can also be very expensive.
The honeymoon, a house or apartment, furniture, and household supplies, transportation, groceries, insurance, and attorney fees…the costs can add up quickly. So, for many newly married couples seeking to build a stable future together, one of the priorities is saving money and establishing a financial plan.
There is one critical way that newlyweds can save money and secure their future this year, and that’s by applying some simple but effective tax planning strategies.
To discover some practical financial tips to help newlyweds save money on their taxes this year, continue reading below.
Taxes probably weren’t at the top of your mind as you said, “I do,” but now that you’ve tied the knot, your financial life has changed, including your tax situation. Updating your filing status may have some unexpected impacts, so it’s essential to get ahead of understanding your new status before you sit down to file your next tax return.
Once you get married, you can no longer use the Single filing status (your marital status on December 31st each year determines your status for the entire year for tax purposes). General tax law allows a married couple to file their federal income tax returns either jointly or separately.
Which filing status is best for you may depend on your circumstances.
For most married couples, filing as Married Filing Jointly will result in a lower tax liability due to a higher standard deduction. However, you can also choose to file as Married Filing Separately and report only your income, credits, and deductions.
The second option may be advisable if:
To determine which filing status is best for your circumstances, it’s a good idea to consult a tax professional (such as Rosenberg & Chesnov) or use the IRS Interactive Tax Assistant.
If you and your spouse work, remember that your combined income may place you in a higher tax bracket. The IRS Tax Withholding Estimator can help you determine whether you need to give your employers a new Form W-4.
Often, marriage also involves a change of name and/or address for one or both spouses. To ensure you receive all necessary documents and notices, the IRS accepts your tax return without issue, and that you avoid any possible penalties or fees that can result from late or incorrect filing, it’s essential to make sure all government and financial institutions, as well as your employer, are aware of the change.
If you or your spouse, or both, have taken on a new name, you’ll need to report this to the Social Security Administration (SSA). The IRS will cross-reference the information you provide on your tax return with SSA records. If the records don’t match, any electronically filed return will be rejected, and any paper-filed return will be delayed.
It’s also a good idea to avoid making a name change too close to tax season, as the delay in data-sharing between the SSA and IRS can cause problems. If your marriage occurs near the end of the tax year, it may be good to file your return using your unmarried name and change your name with the SSA after you file your return.
You should notify the IRS and the U.S. Postal service of your new address if you move. The IRS will automatically update your address when you file your next return. Still, any notices they send in the meantime may not get to you, as the U.S. Postal Service does not forward certain types of federal IRS mail, often including refund checks.
Selecting an electronic deposit for your refund is an excellent way to avoid delays and mix-ups due to your change of address.
Likewise, to make sure your mail, including mail from the IRS, gets forwarded to your new address, you’ll need to submit a forwarding request online or at your local post office.
You should also notify your employer of your name or address change to make sure they can send you your Form W-2. You’ll also need to notify any financial institutions you do business with, including banks, brokerage firms, and employer-sponsored retirement plans, to ensure they send any Forms 1099 to the proper address.
Finally, if you are receiving advance payments of the Premium Tax Credit, you should report changes in circumstances to your Health Insurance Marketplace. Changes to your household, income and family size may affect the amount of the credit you qualify for.
Taking advantage of applicable tax credits and deductions are a common and effective way to reduce taxes for many taxpayers.
A tax credit reduces the amount of taxes you owe, while a deduction lowers your overall taxable income (thus lowering your liability). Generally, a tax credit is worth more than a deduction in a dollar-for-dollar sense, but both can be powerful tools for lowering your tax bill.
The higher standard deduction for filing with the Married Filing Jointly status mentioned above is one of the most beneficial tax advantages to getting married for most couples. (Although, as also discussed above, there are exceptions.)
Additionally, spousal IRA contributions or a contribution to an Individual Retirement Account based on your spouse’s income rather than your own can yield further deductions — which double if you and your spouse both contribute to the same IRA.
A married couple may also be able to take advantage of higher charitable contribution deductions. Being married often means a higher combined income level, which can raise the annual limit of deductions you can claim for your donations.
Depending on your financial circumstances, you and your spouse may also be able to benefit from the Earned Income Tax Credit (EITC), which helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.
Finally, estate tax deductions can also provide substantial benefits for high-net-worth individuals, although these are highly complex and less common.
Other standard deductions you can use to lower your tax liability, if you qualify, include:
A tax professional can help you understand which deductions and credits apply to your circumstances and how to take advantage of them to lower your liability at tax time.
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Above & Beyond
New York City
2 West 45th Street, Suite 1208
New York, New York 10036
565 Taxter Road, Suite 105,
Elmsford, New York 10523
Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.
He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.
His business experience includes:
Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.
Jeff also has a long history of helping individuals manage their taxes and plan their finances including:
Income tax planning and strategy.
Filing quarterly and annual taxes.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.
Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.
Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004. After a career of public accounting and general management, Jody knows the value of good financials. Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.
He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles. His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.
He has a particular expertise in early-stage growth companies. His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.
Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller. He has experience across industries, which gives him a deep understanding of business.
Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.
In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.
He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.
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