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Don’t Overlook Tax Issues when Planning a Wedding by Joanie B. Stein, CPA

Posted on August 28, 2016 by Joanie Stein

The excitement of planning a wedding should not take a back seat to the important tax and legal issues that newlyweds will face after they say I do. Following are five factors to consider when couples marry.

New Names. Taking a spouse’s last name requires an individual to legally change his or her name with government agencies, including the Social Security Administration, the IRS, the U.S. Postal Service and the Department of Motor Vehicles. With a certified copy of a marriage certificate, individuals can also change their names on their financial accounts and update information with their employers and the benefits-plan administrators. Remember, an individuals’ name and social security number must match on all of their legal and financial documentation.

New Address. If either spouse plans to move, he or she should advise the IRS via Form 8822 and also update this information with the U.S. Postal Service via its online tool at www.USPS.com. Similarly, a new address should be reported to both partners’ employers, health insurers and all institutions that hold their individual and joint financial accounts.

New Tax Bracket and Filing Status. Getting married may change an individual’s tax filing status and tax bracket, depending on the couple’s combined income and their ability to claim tax credits and deductions. In addition, newlyweds’ tax liabilities may become affected by the marriage tax penalty, which may require additional withholding tax or estimated tax payments during the year. A qualified tax professional is the best resource for figuring out potential tax liabilities and making the determination of whether it is more favorable to file taxes jointly or separately and whether it makes more sense to claim the standard deduction or itemize. Once the decision is made, both spouses may need to report their new marital status to their employers and complete new IRS Form W-4s, Employee’s Withholding Allowance Certificate.

New Insurance. A new marriage is considered a change in circumstances, for which individuals who purchased health insurance through a Marketplace must report a change in income, address and family size to the Marketplace. This is especially important for those taxpayers who receive advance payment of the premium tax credit in 2016. These payments, which lower the out-of-pocket costs taxpayers pay for your health insurance premiums, are made directly to the insurance company on a taxpayer’s behalf to. Reporting changes in circumstances will help to ensure taxpayers get the proper type and amount of financial assistance to which they are entitled.

New Estate Planning Documents. After exchanging vows, couples should review and update their wills and other estate-planning documents to account for their change in marital status. This may include naming a new spouse as beneficiary of retirement plans and life insurance contracts as well as granting him or her power of attorney over financial and medical decisions.

About the Author: Joanie B. Stein, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where she helps individuals and businesses implement sound tax-planning strategies. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or at info@bpbcpa.com.

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