How Marriage Affects Taxes

The 2011 Wedding Season is in full bloom.  If you are one of those who recently got married or are planning a wedding by the end of this year, it is understandable that the last thing on your mind is “TAXES”.  But wait! Do you know that getting married will affect your taxes? It might affect your refund or even increase your tax liability, which are popularly called “marriage bonus” or “marriage penalty”, respectably.  In other words, your tax situation changes for better or for worse after marriage.

Here are the most important things to know:

1. Your marital status at the end of the year will determine your tax status for the whole year. This means that if you are married on or before December 31, 2011 (“married at year-end”), your tax filing status for the whole year of 2011 is “married”.
2. “Married at year-end” qualifies you to file your income tax as married filing jointly or separately. There are decisions to make regarding how the two of you should file.  Jointly is simpler because you only file one Form 1040.  You do not need to figure out which income, deduction and tax credit items belong to which spouse.  Married filing jointly is the popular choice of married couples.  If you file separately, you will need to file two Form 1040, one for each of you, and you will be ineligible for some potential tax breaks that are not available for married filing separately.
3. Notify the Social Security Administration. Report any name change to the Social Security Administration so your name and Social Security Number will match when you file your next tax return.  If you have not received your new social security card by the time you need to file your income tax, use your former name (the name that matches your SS card).  This way, your income tax form will not be rejected by the IRS for mismatched name and social security number.
4. Notify your employer. Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year with your correct name and address.
5. Notify the U.S. Postal Service. You should also notify the U.S. Postal Service when you move so it can forward any mail, especially IRS correspondence or refunds.

“Marriage Penalty” and “Marriage Bonus”

Before figuring out what tax form and filing status you and your spouse should use, let us talk about the “marriage bonus” and “marriage penalty”.  “Marriage penalty” occurs in some, especially when both of husband and wife are earning approximately the same taxable income and filing as “married filing jointly”. Other things being equal, they will pay more income tax than if both remain single. The reason for this is our progressive-tax rate structure.  The earner of a higher income pays a higher rate of tax on the last dollar of income. Have a look at the following 2011 tax table:  Please note: The tax rate tables are based on taxable income, which is not the same as the gross income on your paystub or the adjusted gross income (AGI) listed on your tax return. Taxable income is after taking any deductions and other exemptions you are eligible for.

Notice that once you get past the 15% tax bracket, the married filing jointly ranges stop being double that of the single ranges. The ranges get tighter and tighter as you move up in income. To illustrate, let us look at a simplistic example. Let us assume that you and your spouse each made $80,000 in taxable income in 2011. Let’s also assume that they you have no other income (such as interest, dividends, and capital gains) and did not itemize your deductions.  As single taxpayers, your marginal tax bracket will be 25%.  However, after marriage, you can no longer file as a single taxpayer (remember?).  Filing jointly will increase your taxable income to $150,000. Your marginal tax bracket rises to 28%.  The increased tax you will encounter ($310) is called the “Marriage penalty”.

A “Marriage bonus” usually occurs when the two spouses’ income are unequal, that is, one is earning way more than the other. Thus, the more likely that combining their income on a joint return will pull some of the higher-earner’s income into a lower bracket. There are also deductibles and tax credits for married taxpayers, which single taxpayers cannot qualify.

Choosing the Right Tax Form and Best Filing Status:

1. Select the right tax form. Choosing the right individual income tax form can help save money. Newly married taxpayers filing jointly may find that they now have enough deductions to itemize on their tax returns. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ. However, if you file separately, both of you should use the same form.  IRS will not allow one spouse to itemize and the other one to claim standard deductions.
2. Choose the best filing status. As stated above, a person’s marital status on Dec. 31 determines whether the person is considered married for that year. Generally, the tax law allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but usually filing jointly is more beneficial.
3. Check your withholding. If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will give you the information you need to complete a new Form W-4, Employee’s Withholding Allowance Certificate. You can fill it out and print it online and then give the form to your employer(s) so they withhold the correct amount from your pay.

For more tax tips, visit our sister website, AqBiz.net.

Celebrating Your Wedding Anniversary

Wedding anniversaries are fun.  These are the days that you and your hubby celebrate your life together as husband and wife.

Woe it is for husbands who forget their wedding anniversaries.  So, husbands, listen up!

Make sure that you have the wedding date listed down or entered in your Iphone, Blackberry or Droid.  Set the reminder to active a few days or weeks before the anniversary date.  This way you have enough time to get her an anniversary gift.

Let’s go over some ideas for anniversary gifts:

• It has been said the “diamonds are a girl’s best friend”, so diamond jewelry is always a welcomed and wildly appreciated gift
• There’s always the “traditional” gifts like chocolates, flowers or wine
• Clothes are fine, but they do not last forever like diamond jewelry does
• Book a romantic get away for you and your wife, which I think is the “most excellent adventure” (with apologies to Bob and Ted)

Romantic Get Away

You can spend a few or several hundreds of dollars for your romantic get away.  The decision is based on how much money you want to spend and the number of days you two can get away from your day to day chores.

• Think of something that you would not normally do like ballroom or line dancinng.
• Reserve a romantic dinner for two at a fancy restaurant or at the restaurant that is memorable for you – where you first met, where you proposed, where you first dine together, etc.
• Book a vacation for your romantic get away. Find cheap airfares, discounted hotels and car rentals! at One Travel.

Best of all, have fun.  Who knows you might get lucky that night

In reality, marriage is not a happy ending but a glorious beginning to your new life.  While life as newlyweds is exciting it can also be challenging.  It is said that the first year of marriage is the hardest and people often speculate on if a new marriage will “survive” the first year.  Don’t let speculation and struggles get in the way, take care of the newlywed issues before they become problems and you’ll have a much easier first year.

Here are issues that newlyweds commonly argue about:

• Money
• In-laws
• Roles of each person
• Quality time
• Children

Money is an issue an alarming number of couples fight about, not just newlyweds.  Throwing a wedding can start your relationship off in debt.  If one of you already has debt, your monthly budget can be strained.  Pointing fingers about who spent what will not help in this situation.  You and your spouse need to sit down as soon as possible, look at your finances, and get a monthly budget in place.  Debt is not the end of the world, even though it can feel like it; you just need a plan to get debt paid off.

Mother-in-laws can be overbearing.   His mom (or your mom) means well, but she can make you feel like you’re married to two people instead of one.  If she always puts her two cents in on your problems refrain from speaking about them in front of her.  Ask your partner to do the same.  She can’t give you meddlesome advice on problems she doesn’t know about.  It’s also not fair to get mad at her for her opinion when you asked her for advice.

When you are sharing your nesting place, have you discussed who will do the dishes?  What about the laundry, paying the bills, grocery shopping, cooking, changing the oil…  If he expects you to cook will he be in charge of clean up?  Roles around the house aren’t about who has to do what chore, but what can you do to make the household run smoothly.  Maybe you and your hubby can do the dishes together after dinner while you both give each other flirty looks and smiles – you might like where it ends up.

When you were dating, as long as you two were together the day was perfect.  After you are married you might not want to watch him play golf and he might not enjoy watching you shop.  That’s okay, just be sure to set aside quality time together.  If one of you has to endure an activity that’s not on their fun list, focus on each other and not the activity.

Children can be a big issue.  Should you start trying right away?  Do you want to wait five years?  Do you even want kids?  Hopefully this conversation took place early on in the relationship.  If not, have it now.  Don’t panic if your partner’s answer doesn’t match

First Year of Marriage

It is common knowledge that the first year of marriage is usually the hardest.  Many couples think that they can bypass this situation by living together before marriage.  While this may help you when it comes to getting to know your partner’s daily habits, there will still be some sticky situations after you’ve said “I do”. Whether you’ve lived together for years, or this is your first time under the same roof, here are some sticky situations that newlyweds often find themselves in – and tips for getting out of them.

Redefining your daily life.

Whether you lived together before marriage or not, there is still a certain rosy glow that is bound to wear off of your relationship eventually.  The last several months, and maybe even years, before you got married were probably consumed with wedding planning.  Now that you’re back in the real world, it can be a disappointing shock to realize that daily life isn’t the fairy tale you thought it would be.  If you find that you and your spouse are getting into regular fights over small issues, there are a few steps you can take to try and solve these problems as early as possible.

• Define your roles. It may be that you both figured the other person would be responsible for dishes, laundry, or making the bed, but neither one of you said it out loud. Be up front and honest about your expectations so that your spouse knows what you want from them, and can work toward making you happy.

• Take time apart. Now that you’re spending every day of your life together, it’s going to be important to let go of the “let’s spend time together” feeling.  You will both want some time alone. Don’t be offended if your partner wants to go in the bedroom and have some quiet time alone, and don’t take it personally.

Managing Money Issues.

One of the biggest sources of conflict for a married couple is money.  While you can’t do much to avoid this problem, there are some easy ways to deal with it.

• Be honest about debt. It is important to be 100% up front about any debt that you carry.  After all, you’ll now be sharing the financial burden.  Set up a plan to deal with your debt as soon as possible, so that it won’t come back to haunt you when you want to buy a house or car.

• Discuss your plans. It’s easy to get into fights about money when the bank is suddenly empty and you both blame each other.  The best way to deal with these types of conflicts is to plan ahead. Decide whether one or both of you will be responsible for managing your money.  Define how much you can spend on a weekly and monthly basis and decide where it will go.

Dealing with friends and family.

After you tie the knot, your social life is going to take a turn.  You have a whole new family of in-laws to deal with for one thing.  With all of the newness of married life, it can also be easy for your friends to get swept under the rug.

• Decide how to handle the in-laws. Dealing with in-laws is something that you and your spouse can easily tackle together.  Decide as a couple how often you want to see them and how much input your want them to have in your life. Agree not to discuss your personal matters with them, no matter how tempting it may be.  Though your mom will probably be very sympathetic and infallibly on your side when you fight with your partner, she’s not the best person to turn to because she might remember the disagreement long after you’ve forgive and forgotten.

• Make time for friends. As a married couple, it’s tempting to gravitate toward your married friends and going out as a couple.  While this is great, don’t forget your single friends, too.  Make time to go out alone and have girls’ and guys’ nights.  Neglecting your friends for too long can have a devastating effect on the relationship and leave you lonely when you find you really need them down the road.

Designing Your New Home Together

In all the chaos of wedding planning, many couples fail to take a few moments to plan for their life after the big day.  While most of the decorating can wait, there are a few things that should be at the top of your list. First is your bridal registry.  Before you select gifts, sit down together and take some time to envision your new home.  The worst thing you can do is haphazardly register for gifts without thinking about how they’ll go with what you already have and how you plan to decorate your home.  Things like dishes, place mats, and linens can go a long way toward setting the tone of a room.  Need a bridal registry checklist?  Download one here.

Tips for Inspiration

If you can spare the time, sit down together and look through some home decorating books and decorating magazines or spend some time surfing the web.  Home decorating shows are another great place to get ideas.  While you don’t need to decide on every detail of your new home at this point, you should determine whether you like a modern or rustic feel.  Decide on color themes for each room of the house as well.  Look at the items that you already have and decide where they will be placed, what will stay, and what may have to go.

To Keep or Not to Keep
After the wedding, it’s time to put your new home together.  Stick to your previous agreements about furniture.  Don’t tell your husband-to-be that you love his ratty recliner while harboring secret plans to “lose” it in the move.  If a beloved piece doesn’t match the new décor of the family room, consider keeping it but moving it to a den or bedroom.

Leave Home Without It
It may be tempting to use this fresh start as an excuse to buy new sets of furniture for every room.  As fun as this may be, starting a marriage in debt will come back to haunt you.  Select a few nice pieces in your budget that will get you started, and work around them.  After all, you have your whole lives ahead of you to build your dream home.  Don’t forget to take advantage of cheap and quick ways to decorate in your new place – such as wallpaper, paint, and borders.  You can also dress up a room with creative window coverings and wall hangings.

Measure Twice, Buy Once
Last but not least, always take time to make calculated decisions when it comes to furniture.  Measure your rooms carefully as well as the pieces going into them.  Many websites offer room planners to help with this task. Before you even go furniture shopping, you should be armed and ready with your measurements.  You should also take advantage of paint chips and fabric samples.  Avoid any spur-of-the-moment decisions, especially on large items like a couch.

Your New Home
Work together and compromise and you can easily put together a warm and welcoming home that will suit you both.  Setting up a house or apartment to reflect both of your tastes is a great first step toward building a life together.

Photo Credit:  Polyvore

Beat the Post Honeymoon Blues

As the excitement and stress of your pending wedding built up, you probably experienced at least a few moments where you were anxious for it to all be done.  Most couples find their honeymoon to be the most relaxing and carefree part of the whole experience of getting married.  But after the honeymoon is over, the newlyweds are frequently faced with an unexpected feeling known as the post honeymoon blues.  Now that the wedding and honeymoon are over, all the excitement is gone.  You’re not a bride and groom any longer, but simply another husband and wife.  Get your marriage off on the right foot, and try these tricks to beat those blues.

1.   Start a new project together.

Planning your wedding took so much time and energy you’ve probably let other hobbies and projects fall to the wayside.  This can be a great opportunity to jump start your marriage right by working together for a common goal.  Whether it’s painting your home, scavenging for antiques, or putting together a photo album or scrapbook of your big day, find something you can enjoy and accomplish together.

2.   Start a new routine.

Don’t just fall back into your old pre-wedding routines (work, dinner, sleep, work again). This can be an especially tricky pitfall if you were already living together before you got married.  Find a new routine to incorporate into your life that helps you take a few moments and enjoy being married.  Some suggestions might be making a big breakfast Saturday morning, taking an evening walk together after dinner, or finding a fun way to use one of your new wedding gifts.  Crockpot Friday anyone?

3.   Go on a date.

It might be tempting to lock yourselves away in your cozy bedroom and ignore the outside world for awhile – and there’s nothing wrong with that – but try to find time at least every other week to go out for dinner and a movie and enjoy an evening together, reminiscing about those first dates you had, never suspecting where it would lead you!

4.   Make your house a home.

Now that you’re married, it’s time to give your house or apartment a new feel.  Take some time to put away your gifts and redecorate a little bit together.  Put up pictures from your wedding and honeymoon, frame one of your invitations, and put little keepsakes and mementos from this special time together around the house.

5.    Keep the love burning.

Just because you are married does not mean to say that you’d stop saying “I love you” to each other.  Better yet, show your spouse that you love him by sending him love notes.  It does not have to be long; just short sentences or quotations written in inexpensive paper or even post-it notes.  Stick them to refrigerators, on his home computer screen, in his brown bag (if he carries one), or even under his pillow.  How about ordering some custom fortune cookies with your love quotations inside?  Be creative – let him guess where the next love gram will appear.  It will be part of the fun.

6. Don’t hold it in.

The first few months and even years of your wedding can be a challenge for even the most fairy-tale perfect couple.  Don’t hold it in and risk getting angry at your spouse for not understanding what you’re going through.  Share your thoughts with each other and find creative ways to deal with them. My husband and I found ourselves bickering over going out to eat.  We both tend to get cranky when we’re hungry so at the first sign of hunger, one or the other of us would pull into a restaurant in an effort to keep the other one happy.  The result was that we were going out to eat before we were both really very hungry, and forcing down a lot of meals thinking we were making the other person happy when neither of us really needed to eat.  Once we recognized our problem we came up with a system, and now we ask each other how hungry we are on a scale of one to ten before we stop to eat.  It may sound silly but it’s avoided a lot of needless arguments.

Most importantly, when you’re feeling the blues coming on, remember all of the wonderful things you have going on in your life now. The wedding may be over and the bride spotlights no longer shining on you, but you have a wonderful spouse to spend the rest of your life with.  Take some time to appreciate your marriage every day.

First, the “Do” list:

• spend time alone together;
• appreciate each other
• be intimate often;
• talk and share and give

But just as important as what you should do is what you shouldn’t do — and I’m sure many of you will step into these pitfalls yourselves, someday. I know I have. I’ve learned from my mistakes, and have learned to recognize when I’m making a fatal error, and how to correct it.

1. Resentment. This is a poison that starts as something small (”He didn’t get a new roll of toilet paper” or “She doesn’t wash her dishes after she eats”) and builds up into something big. Resentment is dangerous because it often flies under our radar, so that we don’t even notice we have the resentment, and our partner doesn’t realize that there’s anything wrong. If you ever notice yourself having resentment, you need to address this immediately, before it gets worse. Cut it off while it’s small. There are two good ways to deal with resentment: 1) breathe, and just let it go — accept your partner for who she/he is, faults and all; none of us is perfect; or 2) talk to your partner about it if you cannot accept it, and try to come up with a solution that works for both of you (not just for you); try to talk to them in a non-confrontational way, but in a way that expresses how you feel without being accusatory.
2.  Jealousy.  It’s hard to control jealousy if you feel it, I know. It seems to happen by itself, out of our control, unbidden and unwanted. However, jealousy, like resentment, is relationship poison. A little jealousy is fine, but when it gets to a certain level it turns into a need to control your partner, and turns into unnecessary fights, and makes both parties unhappy. If you have problems with jealousy, instead of trying to control them it’s important that you examine and deal with the root issue, which is usually insecurity. That insecurity might be tied to your childhood (abandonment by a parent, for example), in a past relationship where you got hurt, or in an incident or incidents in the past of your current relationship.
3. Unrealistic expectations. Often we have an idea of what our partner should be like. We might expect them to clean up after themselves, to be considerate, to always think of us first, to surprise us, to support us, to always have a smile, to work hard and not be lazy. Not necessarily these expectations, but almost always we have expectations of our partner. Having some expectations is fine — we should expect our partner to be faithful, for example. But sometimes, without realizing it ourselves, we have expectations that are too high to meet. Our partner isn’t perfect — no one is. We can’t expect them to be cheerful and loving every minute of the day — everyone has their moods. We can’t expect them to always think of us, as they will obviously think of themselves or others sometimes too. We can’t expect them to be exactly as we are, as everyone is different. High expectations lead to disappointment and frustration, especially if we do not communicate these expectations. How can we expect our partner to meet these expectations if they don’t know about them? The remedy is to lower your expectations — allow your partner to be himself/herself, and accept and love them for that. What basic expectations we do have, we must communicate clearly.
4. Not making time. This is a problem with couples who have kids, but also with other couples who get caught up in work or hobbies or friends and family or other passions. Couples who don’t spend time alone together will drift apart. And while spending time together when you’re with the kids or other friends and family is a good thing, it’s important that you have time alone together. Can’t find time with all the things you have going on — work and kids and all the other stuff? Make time.  It can be done – get a babysitter, drop a couple commitments, put off work for a day, and go on a date. It doesn’t have to be an expensive date — some time in nature, or exercising together, or watching a DVD and having a home-cooked dinner, are all good options. And when you’re together, make an effort to connect, not just be together.
5. Lack of communication. This error affects all the others on this list — it’s been said many times before, but it’s true: good communication is the cornerstone of a good relationship. If you have resentment, you must talk it out rather than let the resentment grow. If you are jealous, you must communicate in an open and honest manner to address your insecurities. If you have expectations of your partner, you must communicate them. If there are any problems whatsoever, you must communicate them and work them out. Communication doesn’t just mean talking or arguing — good communication is honest without being attacking or blaming. Communicate your feelings — being hurt, frustrated, sorry, scared, sad, happy — rather than criticizing. Communicate a desire to work out a solution that works for you both, a compromise, rather than a need for the other person to change. And communicate more than just problems — communicate the good things too.
6. Not showing gratitude. Sometimes there are no real problems in a relationship, such as resentment or jealousy or unrealistic expectations — but there is also no expression of the good things about your partner either. This lack of gratitude and appreciation is just as bad as the problems, because without it your partner will feel like he or she is being taken for granted. Every person wants to be appreciated for all they do. And while you might have some problems with what your partner does (see above), you should also realize that your partner does good things too. Does she wash your dishes or cook you something you like? Does he clean up after you or support you in your job? Take the time to say thank you, and give a hug and kiss. This little expression can go a long way.
7. Lack of affection. Similarly, everything else can be going right, including the expression of gratitude, but if there is no affection among partners then there is serious trouble. In effect, the relationship is drifting towards a platonic status. That might be better than many relationships that have serious problems, but it’s not a good thing. Affection is important –everyone needs some of it, especially from someone we love. Take the time, every single day, to give affection to your partner.
8. Stubbornness. Every relationship will have problems and arguments — but it’s important that you learn to work out these problems after cooling down a bit. Unfortunately, many of us are too stubborn to even talk about things. Perhaps we always want to be right. Perhaps we never want to admit that we made a mistake. Perhaps we don’t like to say we’re sorry. Perhaps we don’t like to compromise. I’ve done all of these things — but I’ve learned over the years that this is just childish. When I find myself being stubborn these days, I try to get over this childishness and suck it up and put away my ego and say I’m sorry. Talk about the problem and work it out. Don’t be afraid to be the first one to apologize. Then move past it to better things.

If you can avoid these eigth mistakes, and focus instead on doing the four things above, you should have a strong relationship. As I said previously, I’m not going to guarantee anything, but I’d give you good odds that you will live happily ever after.