How to manage your finances before and after the wedding.By: Lisa Greene-Lewis
-AS SEEN IN BRIDAL GUIDE MAGAZINE-
Before the Wedding
Nail your big-day budget. It starts with the numbers. Sit down and chat about what your budget is for the big day. Are you paying for everything yourself or will you have help? Once the two of you know what you have to spend, you can then allocate your budget the way you want. Budgeting tools like Mint’s customized budget feature can help you keep track of every last wedding expense — from big ones like the dress to small ones such as reception napkins.
Your dress, flowers and food. No, you won’t get a tax deduction for buying your wedding gown, but you can donate and deduct it as a charitable contribution. Just remember if the value of the items you’ve donated is more than $5,000, you’ll need to get a written appraisal from a qualified appraiser. Qualified appraisers have education and experience guidelines set forth by the IRS and earn their designation from a recognized professional appraiser organization. You can find a qualified appraiser through the American Society of Appraisers.
Your wedding venue. Where you get married may mean that your venue fee could be tax deductible. Some possible tax deductible locations to consider include churches, state parks or local museums registered as certified historic land or certified historic structures.
Track any and all charitable donations. It doesn’t hurt to do some good during the year and get a tax break. If you make any donations during and after your wedding planning make sure to record them all. If filing receipts and keeping records aren’t your strong suit, consider an app like ItsDeductible to help you stay on track.
After the Wedding
Check your tax withholding. The first item on your post-wedding financial checklist should be adjusting your tax withholding with your employer. When you are newly married, your income tax liability will change depending on your spouse’s income. It can be higher or lower — and adjusting your withholding will ensure you don’t over or underpay your taxes. TurboTax W-4 calculator helps you determine with- holdings through your life change.
Choose the best filing status for you and your spouse. Generally, couples who file “married filing jointly” may be able to take advantage of what is known as the “marriage bonus” since tax rates are typically lower for couples filing jointly (vs. separately) and you’re able to claim more tax deductions and credits together. Some married couples who earn higher incomes may see a “marriage penalty” if they have high dual incomes which may bump them up into a higher tax bracket. For example, you may make $100,000 per year and be in the 24 percent tax bracket, but your spouse’s even higher income may bump you up into the 32 percent bracket. To make sure you’re ling the best status for your situation, run the numbers for both joined and separate scenarios with your tax preparer or a program like TurboTax.
Consider itemizing deductions. As a married couple, it may make sense for you to claim itemized deductions rather than the standard deduction. Although the standard deduction nearly doubled under the new tax law ($24,000 married ling jointly), you may have new or additional tax deductions like home mortgage interest, property taxes, and charitable contributions that bump you over the standard deduction and allow you to itemize your tax deductions.
More tax deductions and credits. Many tax deductions and credits require you to file as married filing jointly instead of married filing separately in order to get them, like the Earned Income Tax Credit, Child and Dependent Care Credit, and educational tax benefits.
Think about a Spousal IRA. If your spouse doesn’t work, you can still contribute to a Spousal IRA in your non-working spouse’s name. The requirements include being married and filing with the status of married filing jointly. Next, the total contributions cannot be more than the working spouse’s income. For 2019, couples who file married filing jointly can each contribute up to $6,000 ($7,000 if 50 or older). You may be able to take a deduction for your contributions if the working spouse is not covered by an employer-provided retirement plan like a 401K.
Lisa Greene-Lewis is a CPA and tax epert at TurboTax.