Wolters Kluwer Tax & Accounting Experts talk tax implications for newlyweds!
What: Wedding season has begun and as the flowers are ordered and the menu finalized, another important aspect of a successful wedding plan should also include a look at the couple’s soon-to-be tax situation. Wolters Kluwer takes a look at tax implications for marriages, including same-sex marriages, which to more and more states, are becoming defined as simply ‘marriage.’ This definition also holds true in regards to tax law.
Why: Depending upon several factors, including the incomes of the two spouses and their deductible expenses, their federal taxes may go up or go down upon marriage. So, it is important to understand both of your financial situations before you start this next chapter in your lives. Enlisting the help of places similar to TaxLawCanada can help you to navigate the tax process so you are able to determine who has what, and how it could affect your financial situation in the long run. The happy couple can also take a few steps to plan ahead to make their financial relationship a happy and successful one.
- Further tax changes are currently being considered in Congress for same-sex marriages
- State tax filing rules for same-sex couples vary and depend upon whether they are legally married, in civil unions or in registered domestic partnerships
- Marriage may make it easier to fund or qualify for a deduction on an IRA
- Marriage creates different tax reporting requirements in Community Property states
- Under the tax law, all but the top tax brackets double in size for joint filers compared to single filers, making a marriage bonus under the tax rate brackets more likely than a marriage penalty
- Filing status upon marriage changes from filing singly or head of household to filing jointly or married filing separately. Generally, filing jointly will provide lower taxes, but there are exceptions
- Most taxpayers will be better off claiming the standard deduction than itemizing deductions, but, if you itemize, some deductions may be lost or reduced while others may increase upon marriage
- Name changes should be reported to the Social Security Administration, address changes reported to the IRS, and marital status reported under the Affordable Care Act to avoid tax problems down the line
- Tax filings and benefit options with employers should be reviewed to determine the best options upon marriage
- Marriage may produce tax advantages for gifts and estate planning
Who: Federal tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting and State tax expert Timothy Bjur, J.D., Senior State Income Tax Writer/Analyst at Wolters Kluwer Tax & Accounting.
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