Tax Questions after marriage

[KNewcomb97]

Hi! I got married this year, in April. I am wondering how my husband and I should go about filing our taxes come next April. Neither of us have updated our tax withholdings at work so the taxes coming out of our paychecks have remained the same. We are wondering if we should update these? We need advice on if we should file jointly or separately. We also bought a house in November 2023 so I'm not sure if this affects anything. We have no debt, aside from the mortgage. My husband makes about 2.5x what I do, gross income. I also switched jobs this July. So a lot of big changes have happened and we're looking for advice on what to do! Should we update our Tax Withholdings at work ASAP, wait until the new year, or not at all? We tried meeting with a local financial planner but could never connect, so basically had a string of voicemails going...everything they said was just gibberish to us and not very helpful! Thanks in advance for your time.

[xmasbaby0]

If you were legally married at the end of 2024 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $29,200 (+$1500 for each spouse 65 or older)  for 2024. You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return.

 Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice since with online, you get one return per fee.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

For your W-4's

https://turbotax.intuit.com/tax-tools/calculators/w4/ 

https://www.irs.gov/individuals/tax-withholding-estimator

https://www.irs.gov/pub/irs-pdf/fw4.pdf

HOMEOWNERSHIP DEDUCTIONS

It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher.  Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.  

Standard Deduction

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes. 

2024 STANDARD DEDUCTION AMOUNTS

SINGLE $14,600    (65 or older/legally blind + $1850)

MARRIED FILING SEPARATELY $14,600    (65 or older/legally blind + $1500)

MARRIED FILING JOINTLY $29,200    (65 or older/legally blind + $1500)

HEAD OF HOUSEHOLD $21,900    (65 or older/legally blind + $1850)

[SusanR2]

First things first, congratulations on your marriage and all the other big changes!

Your tax filing status is determined by your status on December 31^st.  So, assuming you live with your spouse all year and are married on December 31, 2024, your choices for filing your taxes for 2024 will be either Married Filing Jointly or Married Filing Separately. 

Typically, it is more financially beneficial to file Jointly but some people choose to file separately for certain reasons (ie maybe one spouse owes back child support or back taxes and so they decide to keep their tax situations separate) even though doing so will make the parties ineligible for certain credits and other tax complications may arise.  In your case, you stated you own a home together – that may allow you to itemize deductions (assuming for purposes of this example that your State tax paid, RP tax paid, mortgage interest paid and other allowed deductions are high enough).  If you were to file separately, usually both parties have to either itemize or both have to take the standard deduction, a limitation that sometimes makes filing separately not the best idea.

When tax time comes, you may want to run the numbers separately and jointly (basically prepare mock returns) and see what is best for you.  You can also enter all of your info into our Tax Caster calculator to assist you to see the best way to go.  (See below for links to our great calculators.)

I am giving  you a link to an article regarding whether to file Jointly or Separately, see below.  It gives more details for you to consider.

In terms of withholdings, you should each complete a new W4 and submit it to your employer.  When you complete the form, there is a section wherein you can indicate that your spouse works and enter the salary so that this is accounted for and the proper amounts are withheld.  At this point, we are almost at the end of the year so it wont make much difference for 2024 but you should do it.  In terms of 2024, your tax return will be like a reconciliation report and whatever was withheld will be reflected and if it is not enough, you will owe.  This can happen if the combination of your salaries pushes you into a higher tax bracket than the bracket withholdings were held at.

We also have a W4 calculator where you can enter your info and it will produce results for you as to how to proceed.  It’s another great tool and I highly recommend you check it out.  Then you will get answers with your actual numbers taken into consideration and can make the best decisions going forward.  Link is below.

Good luck to you and I hope this helps!

Tax Caster:  https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

W4 Calculator:  https://turbotax.intuit.com/tax-tools/calculators/w4/

MFJ v MFS Article: https://turbotax.intuit.com/tax-tips/marriage/should-you-and-your-spouse-file-taxes-jointly-or-separ...

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