Tag Archives: tax burden

Financial Tips for Newlyweds

Know someone getting married?  Here are some quick tips for the newlyweds to start them off on a secure path to financial bliss.

Notify Social Security – Notify the Social Security Administration (SSA) with any name changes. The IRS has a name match program with the SSA and will potentially reject deductions and joint filing status if the name change is not made timely. You do this by filing Form SS-5.

Selling a home? – If selling one or two residences, review the impact of capital gain tax laws and how they apply to your situation. This is important if one of you has only been in a home for a short time or if the home has appreciated in value.

Update your address – Update your address with the IRS if either of you is moving. You do this with IRS form 8822. Also, change your address at the postal service and DMV.

Notify your employers – Change your name and addresses with your employer to ensure your W-2’s are correctly stated. Recalculate your payroll withholdings and file a new Form W-4.

Beware the marriage penalty – If both newlyweds work, your combined income could put you into a higher tax bracket. This phenomenon is referred to as “the marriage penalty”. On the other hand, marriage could also reduce your tax burden. Because of this, now is a good time to conduct a tax forecast.

Review legal documents – Ensure legal titles are as you wish them after you are married. This includes bank accounts, titles on property, credit cards, insurance, and wills.

Beneficiary statement update – Review any retirement savings plans like 401(k)’s and IRA’s. The beneficiaries on these accounts must also be updated.

Review employee benefits – Review your employee benefits and make the necessary changes in health care, insurance, employee retirement accounts, pensions, and tax-preferred spending accounts. Marriage is a qualified event for most employers to allow you to make mid-year changes.

Talk about it – If you have not already done so, spend some time talking about how you will be managing your financial affairs. Who will be paying the bills? Who will be managing retirement accounts and investments? How will spending be managed? What bills and debt exist? Developing a plan and understanding how this will be handled can help reduce misunderstandings and future disagreements.

The Top 1 Percent

According to IRS statistics, the federal income tax burden on the top 1% of filers is slightly less than the previous year. It takes an adjusted gross income (AGI) of $428,713 to make it into the top 1%. The difference – the upper crust paid 37.8% of the tax in 2013, down from 38.1% in 2012.

Since most of us aren’t the top 1%, make sure you take advantage of as many tax break advantages you can. For each major change in your financial situation – marriage, new baby, buy or sale of property, business, etc., plan in advance as much as possible to mitigate your tax burden.

Don’t Let Taxes Upset Your Nest Egg!

Are you one of those who have carefully planned ahead for your retirement – setting up tax-advantaged savings accounts and researching the best place to live? You might be surprised to learn about the many tax issues that apply to retirees which should be taken into consideration when planning your retirement.

For example, you could face taxes on distributions from retirement or investment accounts, required minimum distributions from some retirement accounts and potential taxes on Social Security payments.  You also need to consider state and local income, sales or property taxes – as well as state taxes on retirement benefits and estates.

The good news is, there’s still time to anticipate and reduce some of those complications. Take the time now to properly plan your tax burden so your retirement is secure.