3 Urgent Financial Tips To Guide Newlyweds
Posted by: Brookside Admin
Wedding season is winding down. That means there's a fresh crop of newlyweds just beginning their lives together. There are many financial decisions that will help these new spouses save money throughout the year, and have an easier time at their tax deadline. Here are a few ideas all newlyweds should consider after saying "I do".
Adjust your tax withholding
Remember when you started your job? You filled out a W-4 and likely marked yourself as "single". Well, that's changed, hasn't it? As a married person, the amount of taxes you'll need to pay throughout the year may have changed. If you don't adjust your withholding, you could find yourself with a sizable tax bill in April. On the other hand, you may owe less in taxes, but you'd likely do better by having less taken out of your check each month, rather than waiting for a big return. At this point, you should decide whether you'll be filing jointly because it will impact your taxable income and the exemptions and deductions available to you.
Determine your IRA eligibility
The IRS doesn't much care for your wedding date. If you tie the knot before the stroke of midnight on December 31st, for tax purposes, your considered to have been married for the entire year. That could potentially have a number of tax related implications, but it also directly impacts your qualifications for Roth contributions. The income limits in 2015 for Roth accounts was $131,000 for individuals. For married couples filing jointly, that limit is $193,000 for the couples combined income. If your new spouses income pushes you over that limit, you'll need to withdraw your contributions before your tax deadline. You could also convert to a traditional IRA and face no penalty.
Change your beneficiaries
Many singles have life insurance policies and retirement accounts that name parents or other relatives as beneficiaries. Once you get married, you probably want to update all of these to name your spouse as beneficiary instead. This is a simple task, but one that is often forgotten about. Should you forget and die suddenly, your spouse could be left with nothing to offset funeral expenses and the sudden change to a single income household. This would also be a good idea to create a will, or update an existing will to reflect your new marital status and dictate who will control your assets.
If you have questions about any of these financial decisions, from taxes, to retirement accounts, to estate planning, contact the CPAs at Brown Kinion and Company.