5 Ways Your Taxes Change After Marriage

federal tax bracket

After my husband and I got married, we made a lot of money mistakes.

The biggest area we messed up on was our taxes. We failed to update our W-4 forms with our new household information and got hit with a huge tax bill when we completed our returns.

Marriage can have a significant impact on your finances and how you file your taxes. This milestone in your life can change your federal tax bracket, how you complete your tax returns, and even what you owe.

Find out how getting married can affect your taxes and what you can do to prepare.

1. Filing status

For your 2016 tax return, your marital status as of Dec. 31, 2016, determines your filing options for the whole year. Even if you got married on New Year’s Eve, you must mark your filing status as married.

You must decide to file as married filing jointly or married filing separately. Most people opt to file jointly because it’s simpler, but it’s a big decision you should make carefully.

Taxes are simpler if you file your taxes jointly. You don’t have to worry about separating income, deductions, and tax credits, and you may be eligible for some beneficial tax benefits.

But there are some downsides to marrying filing jointly. You may be responsible for your spouse’s tax errors or omissions. If you qualify for income-driven repayment plans on your student loans, your spouse’s income may affect your status and payments.

If you’re not sure which option is best for your individual situation, talk to a professional tax advisor.

2. Tax deductions

While many taxpayers benefit from taking the standard deduction rather than itemizing, that can change after marriage.

For the 2016 tax return, the standard deduction for individuals is $6,300. For couples who are married filing jointly, the standard deduction is $12,600. If the two of you have medical bills, charitable donations, or other deductions, you may be able to save more money by itemizing your deductions instead of opting for the standard deduction.

Not all couples will benefit by itemizing deductions, so track your deductions and calculate the total before making a choice either way.

3. Marriage tax penalty

The marriage tax penalty describes the potential for more taxes. If you’re single, you enter the 28 percent federal tax bracket if you make $91,150 or more. But when you get married, the IRS hits you with the 28 percent charge if your joint income is $151,900 or more. That can end up costing you thousands more.

For example, if an unmarried couple each made $90,000, they would be in the 25 percent tax bracket. Once they marry, their joint income puts them in the new tax bracket, costing them 3 percent more overall.

But if one partner greatly out-earns the other or if one spouse wants to stay home, there can actually be a marriage bonus when you file your taxes. Marrying filing jointly can reduce your tax bill in that situation.

4. W-4 updates

After you get married, it’s important to fill out a new W-4 form with your employer. Otherwise, you may end up owing money.

When you’re single and filing taxes on your own, one of your filing options is head of household. Your forms will stay with that designation unless you change it; forgetting to do so can cost you. And if you both claim it, you could get a big tax bill.

After your wedding, make sure you both submit new W-4 declaring that you are married. You can also save money by updating your allowances and dependents or by adjusting your withholding to match your new joint income.

By planning ahead and changing your status, you can ensure the government withholds the correct amount for taxes.

5. Name changes

If you plan on taking your spouse’s last name, make sure you contact the Social Security Administration. If you don’t and file with your new name, the IRS may flag your return since your Social Security Number doesn’t match your name in their records.

Unfortunately, you can’t complete the process online and it can take a few weeks. If you need to update your name for your 2016 return, do so as soon as possible to prevent any hiccups with your return.

Visit the Social Security Administration’s website to find out what documents you need and to print out an application for a new Social Security card. You can either mail in the forms and documents or take them to a Social Security office nearby.

Updating your finances

Getting married is a huge milestone and an event you should celebrate. Just remember that it’s also a big change for your federal tax bracket and your tax return, too. By knowing ahead of time what to expect, you can plan for the impact on your tax return and prevent any surprises.

For more information on filing your taxes, check out these surprising sources of income you have to report on your returns.

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