I know its a little early but I'm tying the knot in 2007 and I'm trying to start planning for the tax consequences (or benefits)now. Can anybody point me in the direction of some resources?Thanks,Chris
I like forward thinkers. It's not too early to consider how you might have to adjust withholdings and such for the year you plan to get married.One easy way to figure the impact that marriage will have on your taxes is to use your 2005 income tax returns and work up a "joint" tax return to calculate the changes to expect.I did this for a couple this evening. Right now they each qualify for the EIC (earned income credit). Together on the joint return neither one of them gets it. BUT when they marry, one has medical insurance, the other does not. The cost of medical insurance premiums exceeds the negative tax consequences of losing the EIC.Then there's the moral issue and their plans to have children, etc. Not all decisions should be based on tax consequences.Anyway, once you work up what the difference might be when you file jointly, you can adjust your withholdings from your job to fit the anticipated tax consequences. Remember for all of 2007, you will be considered married even if you get married Dec 31. So you have to adjust your withholding accordingly to avoid having too much or too little withheld. Best wishes to you.Arleen
Since the standard deduction is higher for married than single, you may find that if only one of you used to itemize you may not have deductions high enough to exceed the standard deduction. This happened with my sister. This is not necessarily a bad thing, but it could throw a wrench in your calculations.Apart from taxes, make sure you have a good pile of savings. No matter how carefully you plan, weddings and the following several months of merging two lives can be more expensive than you would think. It took me almost a year after getting married to define a new budget. Different tastes in food, clothing needs, makeup and accessories that I never bought before were suddenly competing for money that used to go straight to the retirement fund. Medical expenses may be another big change. Besides health insurance being more expensive, you have two deductibles and one partner may have more health needs than the other.
I have the number for a good divorce lawyer.I'm really sorry, but couldn't resist. Yes, I'm still bitter.
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