Tax Guide for Newly Married Couples: 3 Important Factors you Should Know!
Summer is the wedding season and newlyweds should understand how tying the knot can affect their tax situation. Here's are three things newly married couples should know:
1. Name and address changes
Name. When a name changes through marriage, it is important to report that change to the Social Security Administration. The name on a person's tax return must match what is on file at the SSA. If it doesn't, it could delay any tax refund. To update information, file Form SS-5, Application for a Social Security Card. It is available on SSA.gov, by calling 800-772-1213 or at a local SSA office.
Address. If marriage means a change of address, the IRS needs to know. To do that, send the IRS Form 8822, Change of Address.
2. Withholding
After getting married, couples should consider changing their withholding. Newly married couples must give their employers a new Form W-4, Employee's Withholding Certificate, within 10 days. If both spouses work, they may move into a higher tax bracket or be affected by the 0.9% additional Medicare tax. They can use the Tax Withholding Estimator on IRS.gov to help complete a new Form W-4.
3. Filing status
After you say, "I do," you'll have two filing status options to choose from: married filing jointly or married filing separately. While married filing jointly is usually more beneficial, it's beneficial to figure the tax both ways to find out which works best. Remember, if a couple is married as of December 31, the law says they're married for the whole year for tax purposes.
For more information about how life changes, such as marriage, the birth of a child, or the death of a loved one, affect your tax situation, don't hesitate to call.
"A good marriage is one which allows for change and growth in the individuals and in the way they express their love." - Pearl S. Buck
Tips on the Tax Treatment of Gifts
Gift tax returns generally do not need to be filed unless you give someone, other than your spouse (if he or she is a U.S. citizen), money or property worth more than the gift tax annual exclusion for that year. Here are four more tips regarding the tax treatment of gifts:
1. The annual exclusion amount for 2023 is $17,000. You and your spouse can make a gift of up to $34,000 to a third party without making a taxable gift.
2. You do not have to file a gift tax return to report gifts to political organizations or qualified charities or for gifts made by paying someone's tuition or medical expenses, as long as the payment is made directly to the institution.
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3. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
4. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.
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