Tax Help for Newlyweds

December 28, 2010 | Posted By: Tim Smithson | Categorized in: Finance, Tax Advice & Tips



Super-simple insight into surviving tax season as a married couple

The cake has been cut, the honeymoon was awesome, and you now find yourself back in the flow of daily life. In-between changing addresses, merging bank accounts, and figuring out how to live together, the last thing on your mind is taxes.

However, keep in mind that now that you are married, Uncle Sam has placed you into a new tax bracket. While filing taxes as a single person can be confusing enough, filing taxes as a married couple can be especially difficult.

Why?

Because you can “claim” your tax deductions in one of two ways:

Standard
Without getting too technical, consider the “standard” deduction your everyday, one-size fits all tax deduction. Many have found this method to be much less stressful than itemizing their taxes.

If you choose to go down the standard deduction route, you will have to decide if you want to file your taxes jointly or separately.

Filing your taxes jointly tends to benefit couples who are making a lot of money, particularly couples who are in a relationship where one spouse earns significantly more than the other spouse.

Filling your taxes separately tends to benefit couples who make close to the same income and fall into the 25% tax bracket.

It is best to use tax software to compare the gains and losses of filing jointly or separately.

Itemize
Despite the fact that itemizing your taxes is a major headache, many couples choose to itemize their taxes because it may be the method that gives them the biggest return.

“Itemizing” refers to the itemized deductions that you can claim in your tax return. Typical Itemized deductions are personal expenses like medical bills, real estate taxes, non-reimbursed business dinners, and travel. To Itemize your taxes, you will need to show “proof” that these events took place (i.e. receipts) and that they qualify for itemization. If you are going to itemize your taxes, organize your files by creating folders or bins for receipts and divide them into categories (ex. medical, home repair, business, etc.)

Couples that tend to itemize their taxes are typically, homeowners, small-business owners, or frequent travelers.

Filing taxes does not have to make your hair fall out
You can survive this year’s tax season. Just make sure to run some preliminary tests to see which method of filing will save you the most money. There are many computer software platforms available that will hold your hand and walk you through the entire process.

If you’re not brave enough to do your own taxes this year, why not hire a tax professional to prepare your taxes? While paying a professional to handle your taxes might cost you a little extra, you get the assurance of knowing that if the company messes up, they will be the ones taking the heat from Uncle Sam.

However you choose to file your taxes, remember that taxes are a little part of your journey together. With a little preparation and research, you too can file your taxes and get back to what’s important - your new life together.

Guest contributor Tim Smithson is a regular writer for the Check ‘n Go Blog where he provides financial advice in the areas of loans, credit, and savings. You can follow Tim on Twitter at @Write_Name_Here.



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