If you’re newly married, congratulations! Marriage is a big step, and it’s essential to ensure you’re prepared for all the changes ahead. One of the most important things to do is ensure your taxes are planned correctly.
Don’t worry; we’re here to help! This post will walk you through tax planning for newly married couples. We’ll cover everything from filing status to deductions and exemptions. So whether you’re just getting started or already feeling overwhelmed, read on for some helpful tips.
Why Newlyweds Need to Plan Their Taxes
If you’re newly married, tax planning is more critical than ever. Here’s why:
When you get married, your tax filing status changes from “single” to “married.” This significantly impacts your taxes because it means that you and your spouse will now be taxed as a single unit. This change can result in a lower tax bill because married couples often have lower tax rates than single taxpayers. But it can also result in a higher tax bill because the standard deduction for married couples is less than the sum of the standard deductions for two single taxpayers.
So if you’re newly married, it’s important to sit down with your spouse and figure out how this change will affect your taxes. You may need to adjust your withholding allowances or make estimated tax payments to avoid an unexpected tax bill at the end of the year.
And if you’re unsure how to do this, don’t worry – that’s what a personal tax accountant in Mississauga is here for! They’ll help you figure out how to minimize your tax liability and make sure you don’t end up with a big surprise when tax time comes around.
Tax Planning Tips for Newlyweds
Marriage comes with a lot of legal benefits. But it also comes with some extra tax complexity. Here are a few tax planning tips to keep in mind as you start your married life together:
- First, if you or your spouse has significant income from investments or self-employment, it’s essential to estimate your tax liability and plan accordingly. You don’t want to be caught off guard by a big tax bill at the end of the year!
- Second, take advantage of the marriage tax deduction by filing a joint return. This can save you both money and hassle come tax time.
- And finally, keep good records of your expenses throughout the year. This will come in handy if you ever need to file an amended return or prove your deductions to the IRS.
With a bit of planning and preparation, you can make sure your taxes are one less thing you have to worry about as a newlywed.
How to Save on Taxes After Marriage
How will marriage affect your taxes? The good news is that there are several ways to save on taxes when you’re married.
- One way to save on taxes is to file jointly. When you file jointly, you and your spouse receive the same tax bracket. This can save you a lot of money if you are in a higher tax bracket than the other.
- Another way to save on taxes is to take advantage of the marriage tax credit. The marriage tax credit is a credit that’s available to married couples who file jointly. The credit can save you up to $1,000 on your taxes.
- Finally, if you’re married and have children, you can take advantage of the child tax credit. The child tax credit is a credit that’s available to parents who have dependent children. The credit can save you up to $1,000 per child on your taxes.
How to Choose the Best Filing Status for Your Situation
Now that you’re married, you have the option of filing your taxes jointly with your spouse or separately. How do you know which one is best for your situation?
There are a few things to consider when making this decision. First, take a look at your combined income. If it’s high, you may be better off filing separately, so you don’t get hit with a higher tax rate. Second, think about which deductions and credits you’re eligible for. It’s a good idea to consult a tax professional to get some guidance.
Finally, consider your financial situation as a whole. If you have a lot of debt or other financial obligations, it may be better to file separately so you can focus on your own financial goals. Ultimately, the best way to choose the correct filing status for your situation is to sit down with your spouse and discuss your options.
If you’re newly married and feeling overwhelmed by taxes, reach out to a personal tax accountant in Mississauga. They can help you manage your finances and ensure you get the most out of your tax return.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.