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Article Series: Taxes
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Your Taxes Before Getting Married
When you’re planning a wedding, between the
dresses and the invitations and the catering and the flowers,
often the last thing on your mind is tax planning. Who wants
to consider something so dry, when you’re busy daydreaming
about your sun-soaked beach honeymoon? But getting your financial
ducks in a row may be crucial to your future financial (and
marital) success. Plan now and you’ll be able to maximize
your worth, avoid costly debt, and take advantage of all of
the
tax breaks available to you; not to mention avoiding getting
tripped up by fighting about that romance killer - money.
First
things first; if you haven’t done this before the wedding,
then one of the first items on your new marital to-do list
is to sit down and have an honest conversation about money.
You need to know where you stand to understand how you can
move forward. Each of you should order a copy of your credit
report and review them together. Brace yourself here; couples
often fudge their financial histories a little bit when they
get together, and it’s not unusual to suddenly discover that
your new betrothed is saddled with a few grand worth of credit
card debt or unpaid student loans. The most important thing
here is to get all the cards on the table and devise a plan
for tackling debt and improving any sagging credit scores.
Once you have an idea of your credit picture, develop a picture
of your financial worth as a couple. Combine your salaries,
investments, savings, and property, and get an idea of your
spending power. With your debts plus your income in mind, develop
a budget that includes all of your household expenses, debt
repayments, and savings. If you have financial goals that you
hope to meet together, like buying a house or saving for retirement,
make sure your budget reflects these goals. Decide who the
most financially savvy one is and give that person the task
of enforcing the budget.
Now, you have to tackle the paperwork to establish yourselves
legally as a married couple. If your name has changed, you
will need to apply for a new social security card and driver’s
license. All of your insurance policies, 401Ks, and IRAs should
be updated to reflect your new name, and your new status. Consider
changing your beneficiary designations so that your new spouse
will inherit these things in the event of your death. Also
make sure that you are adequately insured. Marriage often brings
with it things like large mortgages; make sure the surviving
spouse is financially covered should something happen to one
of you.
You will need to change
your tax information with your employer to reflect your new married status. Thanks to federal laws
that give a variety of tax breaks to married couples, filing
joint tax returns almost always adds up to big savings. One
size does not fit all, however, and sometimes married couples
do better filing separately. You should tackle this question
well in advance of that April 15 deadline. Contact the IRS
for their information booklet for newly married couples and
visit a financial planner to get professional advice. You are
not under any legal obligation to choose one filing method
over another, but picking the wrong one can make your lose
big in the financial world.
When you’re a newlywed, tackling these financial matters can
be tedious, dull, and sometimes downright uncomfortable. In
the long run, though, setting yourselves up the right way financially
means setting yourselves up for long term success.
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SolveYourProblem.com : 2007
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