Holiday proposal season has come and gone. If you’re reading this, chances are you are newly married, engaged or plan on popping the question sometime soon. Yay, congrats! As you plan your wedding, you should also plan on how the bond of matrimony will affect you in the eyes of the state and the eyes of your tax returns.
First, you’ll want to determine how you plan to file your taxes. You’ll want to make sure you’ve notified the Social Security Administration of your legal name change. This includes if you use your spouse’s last name or if you hyphenate your last name.
How you file can depend on your marital status. Your marital status for the tax year is whatever your marital status was on December 31st, the last day, of that year.
There are five classifications of marital status outlined by the Internal Revenue Service, two of which pertain to married couples. The first classification is married filing jointly, and the second classification is married filing separately.
Married Filing Jointly
When couples in wedlock file as married filing jointly, they do exactly what it sounds like. File their taxes together. The couple then both become responsible for their tax return. Thus, if the couple gets money back, it will be theirs to share. If the couple owes the government money, then both parties will be responsible for that payment.
Married Filing Separately
Couples who file as married filing separately each file their own tax return. This may be a best course of action if filing individual returns would result in the couple collectively paying lower taxes than they would if they filed jointly.
With the passing of the 2017 Tax Cuts and Jobs Act, personal exemptions will no longer be in play for the 2018 tax year. Additionally, the benchmarks to meet for standard deductions are practically doubling from $6,350 for singles and $12,700 for married couples to $12,000 for singles and $24,000 for couples. For more information on tax reform, check out our blog post.
Getting hitched will also determine which tax bracket you fall into, and as such how much tax you will be assessed. It is very possible that filing jointly could cause you and your spouse to pay more in taxes. For any 2018 tax preparation, meet with Tom.