Tax Reform 101: Will Getting Married Change My Tax Situation?

Are you planning to get married or are getting married soon? If so, congratulations!

As you and your significant other plan for the big day and your life together, there is a lot to take into consideration. And as fun as planning your wedding may be, don’t forget about your taxes as well – just because you have hearts and flowers on your mind doesn’t mean that taxes will go into retreat!

Here’s what you need to know about how marriage will affect your tax situation under the new tax reform law, which will impact your tax year 2018 taxes (the ones you file in 2019).

The Marriage Penalty

Getting married and filing taxes jointly may raise your taxes if you both are high income earners. You’d think that the new tax law would take care of that so called “marriage tax penalty,” wouldn’t you? Well it may help, but only in part.

Under the new law, married filing jointly income tax brackets have been structured to be about double those for single filers, except at the top 37% tax rate. In addition, the new law lowers a number of the tax rates and also changes the income thresholds at which the rates apply. As a result, the marriage tax penalty now will affect mostly higher income earners. Couples with a huge difference in their incomes may see their taxes go down, resulting in a marriage tax bonus.

Limitations on Itemized Deductions

If you and your intended own a house, you probably have itemized your deductions when filing as single in the past. Under the new tax law, your tax deduction for state and local property taxes, state income taxes and sales taxes are limited to $10,000 total, per return.

So, if your combined state and local property, income, and sales taxes exceed $10,000, that will be the maximum you can deduct, even though individually as singles you may not have hit that ceiling.

Tax Benefits of Having Children

If you have children or are intending to have children in the future, listen up. You will no longer get a dependent exemption for each child that you have. That is true whether you are single or married.

But one major tax benefit of having children remains and has also increased, the child tax credit if your income is below the maximum level needed to qualify.

Filing Jointly

Most married couples file tax returns jointly, since married couples filing separately are barred from many tax deductions and credits. And besides, it’s easier and cheaper to have one tax return prepared rather than two.

That being said, you’ll want to file separately if your attorney advises you to do so to keep your income separate for purposes of child support or alimony issues.

Additional Resources + Filling Out New Paperwork

File a new W-4 with your employer to revise your withholding status from single to married, so that you aren’t surprised with extra taxes at year end. You can use TurboTax W-4 calculator, which has been updated with the new tax law changes to figure out your withholding allowances now that you are married. You can also use TurboTax TaxCaster to get an estimate of your tax refund. This will also give you a side-by-side comparison of 2017 and 2018 to see how tax reform directly impacts you.

Finally, be sure to add your new spouse to your health insurance at work, if that’s appropriate. And if you’ve changed your name, report your name change to the Social Security Administration (www.SSA.gov).

Don’t worry about knowing the new tax laws. TurboTax has you covered and will be up to date with the latest tax laws at tax time. If you have questions at tax time, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered.

Continue to check back with the TurboTax blog to find out the latest about tax reform and tax news.