I just got married – do you have a newlywed tax checklist for me to follow?

[00:00:00] Ralph: Are you a newlywed wondering how tying the knot is going to affect your taxes? Well, stick around for our tax talk Thursday. We're going to unravel the mysteries of married filing and give you a handy checklist to navigate your new financial journey together.

[00:00:14] Ralph: From name changes to new filing statuses, marriages brings a whirlwind of changes to your financial landscape. But don't worry folks. By the end of this episode, you'll be armed with the knowledge to tackle these changes head on, and maybe even save a few bucks in the process.

[00:00:34] Ralph: Before we dive in, let's take a quick glance at yesterday's show. Yesterday, we talked about 10 expenses you can drop immediately and won't even miss. If you missed it, don't fret. Head over to askralph.com to catch up on all of our episodes.

[00:00:57] Ralph: Let's hear from one of our listeners. This comes to us from Glenda from South Dakota.

[00:01:02] Glenda from South Dakota: "Hello Ralph, I just got married last month, and while I'm over the moon about starting this new chapter of my life, I'm also feeling a bit overwhelmed by all the financial changes. Do you have a newlywed tax checklist for me to follow? What's the tax effect of being married, and how do I need to file my returns now?

[00:01:21] Glenda from South Dakota: Are there things I need to adjust with my employer, my bank, or other things I need to consider? My friends keep telling me that there are a ton of things I need to consider. It's a bit overwhelming. I thought all the wedding planning was a chore. But with this, I don't even know where to start. Help."

[00:01:39] Ralph: Well, Glenda, first off, congratulations on your marriage. What an exciting time in your life. And thank you for this fantastic question. I'm sure many of our listeners who are newlyweds or soon to be married couples are wondering the same thing. Welcome everyone to another exciting episode of the Ask Ralph Show, where we're all about mastering your finances from a Christian perspective. I'm your host, Ralph, and I am thrilled you've joined us today. As always, I want to start by thanking all of you for tuning in. Your support means the world to me and I'm honored to be part of your financial journey. Remember, this show is all about answering your questions. So keep them coming.

[00:02:19] Ralph: Now, before we get into today's topic, I'd like to share a Bible verse that I believe sets the tone for our discussion. It's from Ecclesiastes 4:9-10. This is what it says. It says, "Two are better than one, because they have a good return for their labor. If either of them falls down, one can help the other up." Isn't that beautiful? It reminds us that marriage is not just a union of hearts, but also a partnership in all aspects of life, including your finances.

[00:02:49] Ralph: And that's exactly what we're going to talk about today. Also want to drop a quick preview. I interviewed a couples financial counselor yesterday, and I'll be bringing you that interview very soon. We had a great chat about how to get on the same page as a couple. So keep an eye out for that enlightening episode and I'm promising you, it's coming soon.

[00:03:10] Ralph: Well, let's break this down step-by-step shall we? I'll give you a comprehensive newlywed tax checklist and explain the tax implications of marriage along the way. The first thing to cover is this. Name changes and those considerations. If you decided to change your name after marriage, this is the first thing you need to address. Now you might be asking, why is that Ralph? Because your name on your tax return has got to match the name registered with the social security administration.

[00:03:37] Ralph: So here's your first action step. If you've changed your name, you're going to want to file form SS-5 with the social security administration. This form is for applying for a new or replacement social security card. Now I'm going to put a link to that form in the show notes, but you can also find it at ssa.gov. And here's the thing folks. You want to make sure you follow the directions to avoid any problems down the road. I've had clients forget this step and we go to file their first joint tax return, it gets rejected. And that creates a mess. So see to do this first.

[00:04:06] Ralph: Second thing. Update your employer. Once you sorted out your name change, if you decide to change it, it's time to inform your employer. So my second action step. Fill out a new W-4 form. This form determines how much federal income tax is withheld from your paycheck. You'll need to indicate your new filing status and adjust your withholdings accordingly. I'll also put a link to the new W-4 form in the show notes, or again, you can go right to irs.gov. Now, in many cases, your employer will provide you with a new form to complete.

[00:04:36] Ralph: The third thing to do is this. Review your filing status. Now, Glenda, this is where things can get a little interesting. As a married couple, you have two options for filing your taxes. That's a married filing jointly or married filing separately. Now you may also be able to file ahead of household if you have kids, but let's save that discussion for another day. So let's talk about married filing jointly. That's often the most beneficial as it usually results in a lower tax liability. You'll get a higher standard deduction and may qualify for some tax credits and deductions along the way. However, married filing separately might be better in certain circumstances. Like if one spouse has significant medical expenses or income based student loan payments. You also might pick this option if your new spouse has some back tax issues. Or let's just say some shady income sources. Again, that's a whole discussion for another time. So for this action step. Consult with a tax professional or use some really good tax software to compare both filing statuses and see which one benefits you more. If you'd like me to assist you, you can schedule a consultation with me by going to askralphpodcast.com/store. Again, I'll put a scheduling link right in the show notes to make it easy.

[00:05:45] Ralph: The next thing is this. Adjust your withholdings. Remember that W-4 I mentioned earlier? You might need to adjust your withholdings based on your combined income. If both you and your spouse work, you might end up in a higher tax bracket when your incomes are combined. I see this all too often a tax time. So here's another action step. Use that IRS withholding calculator to determine the right amount to withhold from your paychecks. Look, this can be really confusing. So you might just want to schedule a consultation with me or another tax pro. You certainly don't want a big surprise at tax time. I've seen that way too many times in my practice.

[00:06:21] Ralph: Another thing you need to do is consider your deductions. As a married couple filing jointly, your standard deduction will be higher. For example, in 2024, that's this tax year, the standard deduction for a married couple is $27,700. And if you're single, it's only $13,850. You see the big difference there. So here's an action step. Determine whether it's more beneficial to take the standard deduction or itemized. Now I bring this up because this might change now that you're married. This decision will guide your record keeping for the year and areas such as charitable giving and other potential deduction. So you want to make sure you understand that from the front.

[00:06:58] Ralph: You also need to review your benefits. Marriage is a qualifying life event that allows you to make changes to your employer sponsored benefits outside the usual open enrollment period. Got like a special pass when you get married. So here's an important action step. Review and update your health insurance. Update your life insurance and all your retirement account beneficiaries. This is vital. And unfortunately, it's a step that's often missed. It can lead to some unfortunate outcomes. I did a show a few weeks ago on this topic. So I'd encourage you to check it out.

[00:07:30] Ralph: The next thing you can consider is a real true decision point and that's are you planning to combine or keep your finances separate? And this strictly isn't a tax issue, but it's an important financial consideration for newlyweds. This is an impactful decision and frankly, a choice that needs to be flushed out early. In fact, I really feel this is something to discuss before you even marry. There are many ways to structure this and not every couple is the same. So you've got to find what works for you. So here's another action step. Discuss with your spouse or future spouse whether you want to combine your bank accounts or keep them separate. There's no right or wrong answer here. It depends on what works best for your relationship. But it's important to get this sorted out early because in my opinion, financial stresses are one of the leading causes of marital strife. And you're going to want to address this plan up early to beginning and make something that works for both of you. Here's one you might not have thought of. Even feel like pulling each other's credit before signing that marriage certificate is really in your best interest, but that depends on the situation. You got to know what you're going into.

[00:08:32] Ralph: So another step is to update your address. If you moved in together at a new address, make sure the IRS knows where to find you. So here's your action step for that. File form number 8822 to change your address with the IRS. Again, I'll put a link to that form in the show notes, and you can also find that at irs.gov.

[00:08:50] Ralph: Here's another checklist item. Consider the impact on tax credits and deduction. Your eligibility for certain tax credits and deductions might change now that you're married. For example, if you were previously claiming the earned income tax credit as a single person, The income limits are much different when you're a married couple. So let's take another action step. Review those credits and deductions you've claimed in the past and see how marriage affects your eligibility. This is another great topic to discuss with a tax pro now so you don't have a surprise at tax time. I meet with many newlyweds during a consultation, I look over their tax returns and help them make plans for the future. Again, you're welcome to schedule a consultation with me with zoom. It doesn't really matter where you are. There's no obstacle to us working together.

[00:09:37] Ralph: And the last item on the checklist. Yes, we're at that last one. And that is plan for next year. Tax planning shouldn't just happen during tax season. You got to start thinking about next tax year now. Tax planning is where you will find real value. I do this with clients every day and the results will help you make the necessary changes now instead of waiting until tax time when it might be just too late. So the final action step. Consider whether you need to make estimated tax payments, especially if one spouse is self-employed. It's one of the big ones here.

[00:10:09] Ralph: Well now let's talk about the tax effects of being married. The most significant change is that you're now viewed as a single economic unit by the IRS. Whatever your tax status is on the last day of the year, that's what you're considered for the whole year.

[00:10:24] Ralph: This means your combined income could push you into a higher tax bracket, leading to what's often called the marriage penalty. You might have heard about that, but don't panic. That doesn't always mean you'll pay more in taxes. In fact, many couples experience what we call a marriage bonus where they pay less in taxes filing jointly than they would if they were single. The effect really depends on your individual circumstances. If you and your spouse have similar incomes, you might just face that marriage penalty. But if your incomes are disparate with big differences, one spouse earning significantly more than the other, you're more likely to see a marriage bonus. Remember folks, marriage changes your tax situation. But it doesn't have to be scary. With proper planning and understanding, you can navigate these changes smoothly.

[00:11:09] Ralph: Now Glenda, you also asked about things to adjust with their bank account. While this isn't directly related to taxes, it's important to make some financial considerations for newlyweds. You want to decide whether to maintain separate accounts or open joint accounts. Many couples find a combination works well, maybe a joint account for shared expenses and separate accounts for personal spending. If you do open joint accounts, be sure to update your beneficiary information. And don't forget about your credit cards. You might want to add your spouse as an authorized user on your cards or apply for new joint cards together.

[00:11:42] Ralph: All right. We've covered a lot. So let's recap what we've covered today. Number one, update your name with the social security administration if you changed it. Number two, inform your employer and fill out a new W-4 form. Number three, choose your filing status. We talked about married filing jointly or married filing separately. Number four. Adjust your tax withholdings. Number five. Reconsider your deductions. Number six. Review and update your benefits. You also might want to speak to an attorney about some legal documents considered out at your marriage, such as a will, power of attorney, and a medical directive or living will. I did a show on that a few months ago, and I'd encourage you to go listen to that. Number seven, decide whether to combine or separate your finances. Number eight, update your address with the IRS. Number nine, consider the impact on tax credits and deductions and number 10. And I can't stress this enough. Start planning for next year's taxes now.

[00:12:42] Ralph: Remember folks, these changes might seem overwhelming, but they're all part of the new and exciting journey of marriage in this new season in your life. And just like in your spiritual life and your financial life, two really are better than one. You and your spouse can support each other. You can hold each other accountable. And the two of you can work together towards your financial goals. Now, I want to remind you all that this show is called Ask Ralph for a reason. We're here to answer your questions. So if you got those burning financial questions, don't hesitate to send it in. You might just hear it answered on a future episode. That's what I'm here for.

[00:13:15] Ralph: And speaking of future episodes. Tomorrow, we'll be diving into the topic, how does social security survivor benefits work? It's an important topic that many of us don't think about until we need to. So be sure to tune in.

[00:13:27] Ralph: Now, before we wrap up, I want to invite you all to visit our website. Mentioned it a few times. It's at askralph.com. There you can join our community of financially savvy believers and here's the best part. When you join our email list, you'll get a free copy of my book, mastering your finances. That's right folks. This book sells for $10 on Amazon, but you can get it absolutely free just by joining our community. It's my way of saying thank you for being a part of our journey. And Hey, if you found value in today's episode, why not share it with a friend? Maybe you know someone who just got married or is about to tie the knot. This episode could be incredibly helpful for them. Might even be life changing.

[00:14:05] Ralph: So as we close, I want to leave you with this thought. Just as you're joining your lives in marriage, you're also joining your financial journeys. It's an opportunity to grow together. It's an opportunity to support each other. And it's an opportunity to build a strong financial foundation for both of your futures. Remember, every financial decision you make is an opportunity to honor God with your resources. As it says in Proverbs 3:9, "Honor the Lord with your wealth, with the first fruits of all your crops."

[00:14:35] Ralph: Well, that's all for today folks. This is Ralph reminding you to stay financially savvy, and as I always say, God bless you abundantly.