Tax expert Lisa Greene-Lewis offers up savvy planning and deduction strategies to follow before and after the wedding.
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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? Tools like mint.com allow you to keep tabs on your expenses so you’re not stressing over money, when you’ll have more than enough to deal with! Once the two of you know what you have to spend, you can then allocate your budget the way you want.
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. To note: You’ll want to make sure you’re donating to a qualified organization. And keep in mind that if the value you’re declaring on any items you’re thinking about donating is more than $5,000, you’ll need to get an appraisal — in writing, from a certified appraiser. If you think that you’ll have plenty of food left over from the reception, consider having someone take it over to a homeless shelter and request a receipt. You could also donate the reception flowers to the shelter at the same time, or to a nursing home or hospital.
Your wedding venue. Where you get married may mean that your venue payment could be tax deductible. Some possible (and deductible) locations to consider on your list of places to tour include churches or synagogues, state parks or local museums.
Track any and all charitable donations. It doesn’t hurt to do some good throughout the year and get a tax break. If fi ling receipts and keeping records aren’t your strong suit, consider an app like ItsDeductibe 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.
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. Currently, married taxpayers whose adjusted gross income exceeds about $311,000 will start to see limitations on their itemized deductions. To make sure you’re filing 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. Itemized deductions require a little more effort since you’ll need to have your receipts for tax deductible expenses ready when you file your taxes, but you may find that the extra work saves you more money on your taxes. Your tax preparer or tax software program can help you determine whether you’ll save more by itemizing rather than by taking the standard deduction. Consider itemizing your deductions if you’re paying property taxes and home mortgage interest, if you made large charitable donations or had large amounts of out-of-pocket medical expenses.
More tax deductions and credits. Many tax deductions and credits require you to file as married fi ling jointly instead of married fi ling 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 an individual retirement account known as a Spousal IRA. The requirements include being married and filing with the status of married filing jointly. And, the combined contributions for you and your spouse cannot exceed the taxable compensation reported on your tax return.