Upcoming Wedding? Don't Forget These Important Tax and Finance Items!Tax Planning
The summer and early fall are the most popular times to get married in the U.S. If you’re headed down the aisle in the next few months, make sure you have these important tax and finance items on your wedding checklist.
Adjust your tax withholdings – This is very important given the changes introduced by the new tax law. Before making any changes, check out the IRS’s withholding calculator or talk to your tax professional. You can make changes to your withholdings by speaking to your employer or HR department.
Compare each other’s employee benefits – One spouse may have a better 401(k) plan or an available FSA or HSA. Compare all available options and consider investing more from one spouse’s paycheck which can be offset by the other spouse’s income. Remember, contributions to 401(k)s, HSAs, FSAs and other retirement accounts are considered pre-tax dollars and reduce your taxable income.
Make sure you still qualify for a Roth – Beginning in 2019, the maximum modified AGI for single filers is $137,000 (up from $135k in 2018). However, allowable contributions begin to reduce at a MAGI of $122,000. If you are filing married/jointly, then the max MAGI is $203,000 (up from $199k). Again, contributions limits are introduced at a MAGI of $193,000. What does this mean? If you have been contributing to a Roth as single filer, you will not be able to continue as a joint filer if you and your spouse’s combined income tops $203,000/year.
Update your beneficiaries – Make sure to change your beneficiary designations on any retirement accounts and life insurance policies. These policies do not automatically default to your spouse even if you leave everything to your spouse in your will. If you designated a relative when initially setting-up the account, for example your parents, they will still get the money in the event of your passing.
Update your name with the Social Security Administration – If you change your name on your license, but not with the SSA, you will still have to file your taxes under your maiden name. Learn more about changing your information here.
Check out health insurance options – Marriage is considered a special life event that allows you take make changes to your health insurance outside of open enrollment periods. You should evaluate adding yourself to your spouse’s policy, adding your spouse to yours, or staying on separate policies. Effective in 2019, there is no longer a penalty, also called a “Shared Responsibility Payment,” for not having healthcare coverage. However, if one spouse is without insurance, marriage is a great time to reevaluate that as an unexpected medical expense can be a financial catastrophe.
Combine auto and home/rental insurance policies – Some insurance providers will give you a discount just for getting married! You may find additional savings by bundling other policies together.
Consider life insurance – Life insurance isn’t the right fit for everyone, but if one spouse could not cover the bills without the other it is an option worth considering. This often becomes even more important when children are added to the equation. Some people are capable of self-insurance (i.e. have savings, investments, or inheritance that could cover a financial gap in the event of their passing) or each have incomes that can sustain the life (cover the expenses) you’ve created together. Speak to a licensed professional to determine if this is the right fit for your family.