I was married last month and have just returned to work after my honeymoon. Now that I'm married, I'm wondering whether I need to do anything about my taxes?
See Also: Tax Planning for Life's Major Events
Congratulations! A few key moves now can help you avoid trouble at tax time. If you were married anytime in 2016, the IRS considers you to be married for the full year, so you both should adjust your tax withholding with your employers. A two-earner couple may end up in a higher tax bracket after the wedding (the so-called marriage penalty) because of the way the tax brackets for couples filing jointly are set. You and your spouse should use the worksheets in IRS Publication 505 , Tax Withholding and Estimated Tax, to figure the number of allowances you can claim as a couple, which will determine how much money your employers will withhold in taxes from your paychecks.
After you come up with the total number of allowances as a couple, decide how to divide them between the two of you. Then each of you should submit a new Form W-4 to your employer. (Kiplinger's Tax Withholding Calculator is usually a great source of information about adjusting your withholding, but it is designed for years when your filing status does not change.) See Tax Planning for Newlyweds for more information.
Your married status may also affect whether you qualify to make Roth IRA contributions. The income limit to contribute to a Roth IRA is $132,000 for singles, but it's $194,000 for married couples - so two people who were close to the income limit when single may earn too much for a Roth after they're married. If you've already made a Roth IRA contribution for 2016 and discover that your joint income is now too high, ask your IRA administrator to switch your 2016 Roth IRA contributions - plus all the earnings on that money - into a traditional IRA by October 15, 2017.
If you made contributions to the Roth in earlier years, the administrator should calculate how much of the earnings in the account should be attributed to the 2016 contribution. You need to switch only the 2016 contribution and its earnings to a traditional IRA; you can keep any money you contributed to the Roth in previous years in the account. See Retirement Plan Contribution Limits for 2016 for more information.
If you change your name, be sure to report the change to the Social Security Administration and get a new Social Security card. Otherwise, any tax refund could be delayed because the IRS will have trouble when it tries to match the names and Social Security numbers on your tax return. File Form SS-5 at SSA.gov or call Social Security at 800-772-1213 for more information. If you move, file Form 8822 with the IRS to report your change of address.
See Also: 10 Financial Things Newlyweds Must Do
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
