I just got married. What do my husband and I need to do about taxes, insurance and other financial decisions?
Newlyweds need to work together to make key decisions about their financial strategies and future goals. But you and your spouse should also take steps right away to take advantage of valuable benefits available to married couples. Here's what you can do to save money and protect your finances.
1. Check out new health insurance options.
Getting married is one of the special situations in which you can make changes to your health insurance in the middle of the year—whether you have coverage through work, on your own, or from Healthcare.gov or a state exchange. Compare the cost of adding your spouse to your policy, adding yourself to your spouse's policy, or keeping separate policies. One employer may have much better coverage than the other, for example, but some charge a lot more for dependents.
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Compare coverage for both your and your spouse's doctors plus out-of-pocket costs for your prescription drugs and other expenses. Think twice about switching policies midyear if you've already paid a lot toward this year's deductible. If you qualified for a subsidy to help with the costs, let the marketplace where you bought coverage know you're now married so you don't have a surprise at tax time; you may qualify for a higher (or lower) subsidy now that your household size has changed. For more information, see Healthcare.gov's "Reporting Life and Income Changes to the Marketplace."
2. Make the most of each other's employee benefits.
Find out whether your employer offers other benefits to your spouse, such as dental or vision insurance. Consider disability insurance, especially if your spouse depends on your income. You may also be able to sign up for a flexible-spending account or health savings account and use the money tax-free for either spouse's medical expenses. And look at your 401(k)s and other retirement savings plans as one big portfolio. If one spouse's plan has better investing options and lower fees, consider investing more money in that plan. See Money Mistakes Couples Make for more information.
3. Save on car insurance.
Tell your auto insurer about your wedding. Your rate may drop now that you're married, and you'll get a multi-car discount if you combine coverage under one policy. Even better, shop around for coverage, especially if you're moving. The company that offered the best rate in the past may not be the most competitive for your new situation. See Reshop Your Car Insurance in 2015 for shopping strategies.
4. Update your homeowners or renters insurance.
If you move after getting married, let your insurer know your new address—your rate may rise or fall depending on the risk—or shop around for new coverage. You may get a 10% to 15% discount by consolidating auto and home insurance with one company. You may also need to adjust your possessions coverage after you combine your households and add in big-ticket wedding gifts. And you may want to get special coverage for valuable items, such as an engagement ring. See Protect Your Valentine Diamond for details. For more information, see 3 Simple Steps to Save on Homeowners Insurance.
5. Decide whether you need life insurance.
You may not need coverage if you and your spouse both work and could cover the bills with either income. But you do need coverage if you depend on both incomes to cover certain expenses, such as a mortgage—and you'll definitely need coverage after you have children. See How Much Life Insurance Do You Need? If you already have life insurance, whether on your own or through your employer, update your beneficiary designation.
6. Adjust your tax withholding.
Now that you're married, you may need to adjust the amount of money your employer withholds from your paychecks for taxes. Otherwise, you may get an unexpected bill at tax time. Complete the worksheets with Form W-4 to determine how many withholding allowances you should claim. If you plan to file a joint return, use your combined income, adjustments, deductions, exemptions and credits to come up with the number, then split up the total allowances any way you want between the two of you. See the IRS's Tax Withholding page, and our Tax Planning for Newlyweds for more information.
7. Figure out if you still qualify for a Roth.
If you're married anytime before December 31, 2015, the IRS considers you to be married for the full year, and your combined income may bump up against or exceed the limit for Roth contributions. In 2015, you qualify if your income is below $131,000 if you're single or $193,000 if you're married filing jointly. If you no longer fall below the limit, you have until your tax-filing deadline to withdraw any contribution you've already made (and any earnings on that money) or convert it to a traditional IRA without penalty. See Undoing a Roth IRA for more information.
8. Change your beneficiary designations.
In addition to updating your beneficiary designation for your life insurance, update your beneficiary for IRAs, 401(k)s and other retirement plans. That's a must even if you have a will giving everything to your spouse. If you named your parents or other relatives as your beneficiaries when you first signed up for your 401(k) at work, for example, they'll get the money in your account after you die unless you change the beneficiary designation. Also create a will to control who inherits your assets, and consider other key estate-planning documents. See 8 Smart Estate Planning Steps.
9. Contact the Social Security Administration if you change your name.
Fill out Form SS-5 to get a new Social Security card. See this Name Change FAQ for details. Don't forget to change the name on your bank and investment accounts, driver's license, passport, and other accounts and documents. Make sure your employer updates your name for tax withholding. Your tax refund could be delayed if the name on your return doesn't match the name Social Security has for your number.
10. Figure out how to blend your finances.
Decide whether to open joint bank accounts or keep separate accounts; many financial experts recommend you have both kinds. Also determine whether it's better to add your spouse to your credit card accounts or keep separate cards. If you have a much higher credit score than your spouse, having combined credit accounts can drag down your score. Also start talking about your long-term financial goals. See 10 Questions to Ask Before Saying "I Do," Smart Money Moves for Newlyweds and Knight Kiplinger's 5 Financial Tips for Newlyweds column.
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