Check Your Tax Withholding

Getting married is one of those life events that can throw your financial plan into disarray, but financial planning doesn’t have to be daunting after marriage. People have been getting married for years.

If you got married this year or are simply planning to, your tax situation will change significantly and careful planning today can mean you save as much as possible next year.

Check Your Tax Withholding
The first item on the list should be adjusting your tax withholding with your employer.

When you are newly married, your income tax liability will change depending on your spouse’s income. It can be higher or lower and adjusting your withholding will ensure you don’t over or underpay your taxes.

For example, if your spouse isn’t working, you’ll see a tax savings as a result of being able to add an additional personal exemption – $4,000 in 2015 and $4,050 in 2016 – without a corresponding increase in income. You’ll also be able to double your standard deduction from the $6,300 that it would be if you are filing individually, to $12,600 under married filing jointly. All of that will lower your taxable income, and therefore your tax bill.

If it looks like your tax liability will be lower this year, then you can increase your W-4 allowances. This will lower income tax withholding from your paycheck, and improve your cash flow immediately.

If your spouse brings in an income, particularly one that is comparable to yours or higher, you may see a higher total tax liability. Your spouse will also have withholding to adjust.

Work with your company’s HR department or payroll department to change your withholding.

Tax planning is all about advanced preparation, and marriage is one of those events you can see coming so plan as much as you can today.

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