Smart tax tips for newlyweds

Life after marriage can often be confusing from a financial perspective. Read these tips on smart approaches to taxes for newlyweds.

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Congratulations! A few key moves now can help you avoid trouble at tax time. If you were married anytime in 2016, the IRS considers you to be married for the full year, so you both should adjust your tax withholding with your employers. A two-earner couple may end up in a higher tax bracket after the wedding (the so-called marriage penalty) because of the way the tax brackets for couples filing jointly are set. You and your spouse should use the worksheets in IRS Publication 505, Tax Withholding and Estimated Tax, to figure the number of allowances you can claim as a couple, which will determine how much money your employers will withhold in taxes from your paychecks.

After you come up with the total number of allowances as a couple, decide how to divide them between the two of you. Then each of you should submit a new Form W-4 to your employer.

Your married status may also affect whether you qualify to make Roth IRA contributions. The income limit to contribute to a Roth IRA is $132,000 for singles, but it's $194,000 for married couples—so two people who were close to the income limit when single may earn too much for a Roth after they're married. If you've already made a Roth IRA contribution for 2016 and discover that your joint income is now too high, ask your IRA administrator to switch your 2016 Roth IRA contributions—plus all the earnings on that money—into a traditional IRA by October 15, 2017.

If you made contributions to the Roth in earlier years, the administrator should calculate how much of the earnings in the account should be attributed to the 2016 contribution. You need to switch only the 2016 contribution and its earnings to a traditional IRA; you can keep any money you contributed to the Roth in previous years in the account.

If you change your name, be sure to report the change to the Social Security Administration and get a new Social Security card. Otherwise, any tax refund could be delayed because the IRS will have trouble when it tries to match the names and Social Security numbers on your tax return. File Form SS-5 at SSA.gov or call Social Security at 800-772-1213 for more information. If you move, file Form 8822 with the IRS to report your change of address.

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This article was written by Kimberly Lankford from Kiplinger and was licensed as an article reprint from August 1, 2016. Article copyright 2016 by Kiplinger.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third-party provider of the reprint permission and Fidelity Investments are independent entities and not legally affiliated.
The images, graphs, tools, and videos are for illustrative purposes only.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
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