Money Matters - Mid-Year Tax Planning: Newlyweds
BOSTON (CBS) - I know its summer and all you can think about is cooling off and getting to the beach but this is a good time to do some tax planning.
We talked about newlyweds in June and now that they are back from their honeymoon there are some mundane but necessary details that need tended to. And if you divorced this year, much of this information applies to you also.
The first things to handle are changes of names and address. If you have decided to change your name, make a list of everyone who needs to know your new name and address. A new trend is for a couple to take each others last names and separate them with a hyphen.
If you chose to use your spouse's last name, the first change of name & address should be the Social Security Administration to update your information. Do the same with your employer and then start the changes on all of your financial accounts, credit cards and legal documents.
Review all of your retirement accounts and update the beneficiary designations. Life insurance beneficiary designations should be updated as well. If you had designated your brother as the beneficiary on your life insurance policy and you should pass, away without a change he will receive the proceeds from the insurance and not your new spouse.
If you and/or your spouse have a new address, notify the U.S. Postal Service as well, so that it will be able to forward your mail. You can do this on line for a $1 charged to your credit card or pick up a form at the post office.
The Postal Service will also pass on your new address to the IRS, so they can update your account, but I would suggest you also notify the IRS directly by sending form 8822, Change of Address.
Check your withholding if both you and your spouse are working, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator to assist you in determining the correct amount of withholding needed for your new filing status.
The IRS Withholding Calculator will even provide you with a new Form W-4, Employee's Withholding Allowance Certificate you can print out and give it to your employer so they can withhold the correct amount from your pay
Your marital status on December 31 determines whether you are considered married for that year. Married persons may file their federal income tax return either jointly or separately in any given year. Choosing the right filing status can save you money.
Figuring the tax both ways can determine which filing status will result in the lowest tax – usually, it's filing jointly. Publication 501, Exemptions, Standard Deduction, and Filing Information, has detailed information on filing status.
