November 6, 2015

Accounting for Your Wedding

A client called the other day and told me she was planning to get married. “Congratulations!” I said. “Yes, thank you” was her reply, “but I need to know which will be better for our taxes – if we have the wedding this year or next.”

How romantic, right? But the decision to push the wedding date up or back a few months can potentially save (or cost) the happy couple a lot of tax dollars.

There are many variables that affect this calculation. The income of the future spouses is the most obvious, particularly if there is a large disparity between them. Filing status is another. Most unmarried people must claim Single filing status. But if they have children, as from a previous marriage, they may be able to claim the much-more-favorable Head of Household status. This option is unavailable if they’re married. Marital status can affect many other calculations on one’s tax return, like the alternative minimum tax (AMT) calculation, exemption and itemized deduction phase-outs, and the net investment income tax. State income taxes even need to be considered in a state like Ohio, which has a steep marriage penalty.

Preparing for a wedding can be a daunting process, but it makes sense to spend a few minutes with your accountant and let him or her run the numbers before you set a date. Even if the day is already fixed, you may be able to make some financial moves ahead of time to maximize your tax savings.

Hobe & Lucas Certified Public Accountants, Inc. is a full-service accounting and business consulting firm dedicated to providing clients with exceptional value.

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