With tax season soon approaching, your thoughts naturally focus on the essentials needed to file your annual return. If you’ve recently gotten married or you plan to do so during the upcoming year, you shouldn’t underestimate the impact that it will have on your income tax situation. Several factors can affect your total tax liability, so take a look at some facts and advice before you finalize your wedding plans or complete your return.
Are Cash Gifts Considered Taxable?
You may worry about tax liabilities incurred by gifts received from friends and family. However, the Internal Revenue Service will cut you a break on any money you receive in this fashion. According to the pros at Intuit Turbo Tax, gifts are not considered taxable income. TaxAct also explains that you don’t have to pay any gift taxes on these amounts either. In fact, the donors must file gift tax returns to the IRS if they give you more than $15,000 within one calendar year.
What if Friends or Relatives Pay for Wedding Services?
Some friends and family may generously offer to fund part of your nuptial celebration by directly paying wedding vendors on your behalf. In those cases, you’re still off the hook. The Nest’s Fraser Sherman clarifies that these are also considered gifts by the IRS, regardless of whether they’re given directly to you or remitted to a vendor for services provided.
May I Claim Tax Deductions for Wedding Expenses?
Writing for SmartAsset, financial expert Rebecca Lake points out a few key wedding expenses that you may be able to claim as deductions on your tax return:
- Ceremony fees paid at houses of worship or nonprofit venues may qualify as tax write-offs.
- The value of any leftover food donated to charity may also be tax deductible.
- Giving used apparel and accessories to a qualifying nonprofit could score you some deductions.
- Charitable donations can also include used wedding decorations such as candle holders, vases, or flowers.
Don’t forget to obtain the necessary documentation if you choose any of these deductions. IRS Publication 526 lists charitable contribution guidelines for the 2017 tax year, but be sure to consult any updates for 2018 and beyond.
How Will Getting Married Impact Our Income Taxes?
According to H&R Block’s Tax Information Center, your marital status on December 31 of the tax year determines the filing status you’re required to use on your return. That applies even if you marry late in the year, so it’s wise to have some idea of how your incomes and expenses could either work in your favor or leave you with a bigger tax bill. H&R Block also reveals some relevant factors that could impact your tax situation:
- You and your spouse’s combined incomes may place you into a higher tax bracket.
- Married couples filing a joint return can claim two personal exemptions.
- The standard deduction is higher for married couples filing joint returns.
- After the wedding, you’ll want to update your status and withholding choices with your employer. Depending on your situation, smaller amounts may be withheld from your paycheck.
- Married homeowners may opt to itemize deductions thanks to mortgage interest and other expenses.
- If you change your name, update your Social Security records as soon as possible.
Taking Control of Your Taxes
Getting married can add more complexity to your yearly tax returns. Yet while tying the knot may result in more money owed, you needn’t worry about gifts adding to your liability. Moreover, charitable donations from unused wedding items can take some bite out of your tax bill. Understanding how your tax situation will change can help you navigate the process of filing after you say “I do.”
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