Tips for Filing Your Tax Return as a Newlywed
by Jillian Gaietto on Mar 5, 2018
When you get married, you're not only combining lives but usually tax returns as well. Here are six tips to get the lowest possible taxes as a newly married couple.
1. Are You Eligible To File as a Married Couple?
If you weren't married on the last day of the tax year for which you are filing, you can't declare yourself married filing jointly or married filing separately and will likely declare yourselves as single individuals. If you wait to get hitched until January 1, 2018, you won’t be able to declare yourself married on your tax returns for the 2017 tax year.
2. Look into Prohibited Deductions and Credits
If you file as married filed separately, you cannot claim student loan interest deductions, the tuition and fees deduction, education credits, or earned income credits. If you qualify for more than one of these, you could lose more than a thousand dollars of your refund by leaving them off your return.
Also, if you file as married filing separately, you both have to choose either to take the standard deduction or to itemize deductions. If your new spouse has accumulated enough deductions and they decide to itemize their deductions, then you have to as well.
3. Is Your State a Community Property State?
If you live in Arizona, California, Idaho, Louisiana, Nevada, New, Mexico, Texas, Washington or Wisconsin, you will have to decide and delineate what is considered community/marital income and what is considered your income. Though the rules can vary between states, your combined income could be split equally between the tax returns and would defeat the purpose of filing separately.
4. Do You Have Any Possible Tax Liens?
One reason many married couples file separately is that they have prior debt that could be deducted from their taxes. This can include child support, student loans, or tax liability of a spouse acquired before the marriage.
However, filing separately for prior debt issues may not be necessary. There are additional forms available by the IRS that can be filed alongside your married filing jointly return until your spouse is caught up with his/her debt.
5. Consider Your Taxable Income
When one spouse makes more than the other, the marginal tax rates gained through a married filing jointly return could be a significant tax saver.
For example, if you have taxable income of $55,000 and have a spouse with taxable income of only $8,000, you can drop from paying 25% of your taxable income above $36,250, down to only 15%.
6. Try Both Sets of Tax Returns
If you prepare your taxes on software, it will take you an extra couple of hours to do both, versus just filing the way you think is best. But doing this at least once will help you decide how you will want to file in future years. Of course, file the tax return with the higher tax savings.
The Bottom Line
If you file married filing separately, you are going to go through a more complicated tax process, especially if you live in a community property state. You will also likely lose out on key deductions and credits. However, you never know which way is best to file until you try both out and file the way that works best. Developing a relationship with an accountant or working with a financial planner early in the tax year can help you to save even more after your first anniversary!