You found the pick of the litter a while back, and during the past wedding season you married your mate. Did you remember to add Uncle Sam’s name to your dance card for the reception?
Better not howl in disgust at the idea. There’s a legal aspect to marriage that transcends the personal relationship. Compare the situation to getting a new Puppy. As long as you treat Puppy right when it comes to walks, snacks, dinners, and playtime, Puppy will respond with affection and grateful licks. But no matter how tail-waggingly happy Puppy appears, if you haven’t licensed Puppy, and if you haven’t dangled the right dog tags from Puppy’s neck, Uncle Sam, or, more likely, one of his local kin, like the Pound, will be after you.
Approach your new marital status the same way you approach your relationship with Puppy: think of it as a personal union, under the auspices of governmental authority. When you ignore the legal aspects of marriage, the fallout can be a drain on the relationship itself. And, whether you agree or disagree with the concept, a couple’s finances are nothing if not legally influenced.
Marriage counselors and the IRS alike often growl about the major marital bone of contention involved in digging around in a spouse’s financial matters. Do yourself and your partner a favor: address your new financial concerns, including your new marital status, right away. Your marital status as of December 31 defines your marital status for IRS purposes for the entire year.
Here’s a checklist for the newly married to keep on paw:
- Verify that your married name matches the name the Social Security Administration (“SSA”) has on file for you. If you’ve changed your name, you will probably need to file Form SS-5 to alert the SSA to a name change and to obtain a new Social Security card reflecting your new name. Form SS-5 is available on-line or at the local SSA office.
- If you’re moving to a new doghouse, notify Uncle Sam by filing IRS Form 8822, Change of Address. (Also it’s a good idea to notify the United States Post Office. Visit USPS.com for forms for forwarding information.)
- Sit with your new spouse to discuss what will happen with your taxes now that you’re married. Multiple factors will impact what you owe. For instance, your spouse might want to file married filing separately, an approach that comes with penalties from Uncle Sam for the both of you. Or your combined income may bump you both into a higher tax bracket than what either of you faced in the past. And if neither of you itemized deductions in the past, it might be time for a change.
- All this means that you will need to plan with your spouse as to how much federal tax to have withheld from your paycheck. If you’re self-employed and making estimated tax payments, those payments could be heavily impacted as well. To help you guestimate your upcoming tax liability, the IRS offers a Withholding Calculator tool at IRS.gov .
- Also, consider investing in some couple’s financial therapy to make decisions that will impact your marital tax liability both short- and long-term. Think about consulting with a tax planning professional, such as an attorney, for matters such as real estate purchases, business concerns, and investment portfolios. The consultation fee may well be more than paid for with what you will potentially save in tax dollars.
- Once you and your spouse have decided on the appropriate financial approach for the two of you, notify your employer of your new status and ask to update IRS Form W-4, Employee’s Withholding Allowance Certificate. This will help ensure that the correct amount of federal taxes will be withheld from your paycheck, so that you don’t owe a lot come Tax Day.
If you’re looking around for that financial adviser, call The Boss at Law Offices of Christy Lee, P.C., and schedule an appointment. When you drop in, bring your unattached bridesmaids and introduce us. Tell them all I’m still single!