Taxes Made Easy: How TaxAct® Serves Newlyweds and New Parents

Taxes made easy for newlyweds and new parents

Tax advice for recently married couples and new parents filing in 2022

There are few days as memorable as one’s wedding day or the birth of one’s first child. These events signal new life chapters. Rarely is the first thought in these moments about how taxes will be impacted though. Nevertheless, these events cause major changes to a person’s tax situation and their tax return. Thankfully, TaxAct® can assist people experiencing these life changes in filing their returns as well as answering questions about the tax implications along the way.

Mark Jaeger, Vice President, Tax Operations at TaxAct, states that newlyweds must first decide whether they will file jointly or separately. He notes some situations where the latter may be more beneficial than the former, but that usually the former requires less paperwork and comes with more benefits. When deciding which choice is best, newlyweds should evaluate how their finances may impact their taxes as there are some instances where filing jointly puts married couples at a disadvantage.

"From a tax code perspective, there are a few disincentives to be married," says Jaeger. "For instance, let’s look at the additional Medicare tax of 0.9%. If you earn over $200,000 in wages as a single person, you owe that additional Medicare tax. But if you’re married filing jointly, you owe the additional Medicare tax if your [combined] income is over $250,000. There’s only a $50,000 difference in the income threshold for owing that money between single and joint filers rather than the threshold doubling for joint filers to account for what would otherwise be two single filers."

Jaeger emphasizes that some of the taxable income thresholds imposed on married taxpayers are not twice those of single individuals; married couples thus typically pay more in taxes than those who are single filers. These circumstances comprise the "Marriage Penalty": additional tax liabilities that married folks incur and unmarried taxpayers do not. Marriage penalties are instituted on a federal basis as well as in more than a dozen states.

Some marriage penalties have been softened or eliminated, however. The Tax Cuts and Jobs Act (TCJA) equalized the tax rates for joint returns with their single counterparts by doubling the income range of the single tax brackets for married couples filing jointly (except the highest tax bracket). Jaeger adds that in 2022, the charitable contributions write-off for married couples doubled that of single individuals for the first time.

Jaeger suggests married taxpayers stay organized and work together to plan and prepare their taxes. "Anytime you’re talking about money, that can naturally be a sticking point in any relationship. So, the first thing I always recommend is to get organized as it relates to your documents, at least for the first year, and then you can start having discussions about tax planning." Jaeger also encourages married couples to make a plan together regarding retirement, health insurance, and savings.

"Little things like that will not only impact your day-to-day lives, but also impact you from a tax perspective, help you maximize your refund and reduce the amount you pay in taxes," says Jaeger.

One major life event creates a variety of tax incentives for married couples, though: the addition of children to the family. Whether born from the parents, adopted, or fostered, children bring with them different tax credits and write-offs.

Said Jaeger: "Generally speaking, there’s just so much in the tax code that you can qualify for by having children. You might think of the child and dependent care expenses, the child tax credit, the adoption credit, or the Recovery Rebate Credit you can get this year for having a newborn. There’s just a lot in place for having a child that’s really helpful when it comes to taxes."

Jaeger said that these various tax benefits are the government’s effort to provide a little financial relief to those with dependents. The goal of these credits and deductions is to lessen the financial burden of parenthood so the next generation can thrive.

For its part, Jaeger says TaxAct prides itself on being an ideal tax filing software because it is user-friendly and provides support throughout the filing process to help first-time filers confidently complete their returns. Newlyweds and new parents alike can work with tax experts for free using TaxAct Xpert Assist*, which allows them to quickly connect filers with CPAs and other tax experts to get their questions answered. They also can take advantage of TaxAct Xpert Full Service**, a new service where users can submit their tax documents to a tax professional for expert hands-on preparation from start to finish. The site also allows users to complete and file their own returns, aided by various features easy import that make the experience easy and thorough year after year.

"We can help you step through those life event changes … You go through it a year, you get organized … and then year after year it’s pretty simple to roll over your information [from last year’s tax return] and meet your obligations with the federal government and your state government to file your taxes each year."

With numerous tax tools and resources available from one of the market’s most cost-friendly options, those starting their families can file their taxes confidently. To learn more, go to www.TaxAct.com.

* TaxAct Xpert Assist: Available to certain users of TaxAct's online, consumer 1040 product for an additional charge. Service hours limited to designated scheduling times and by expert availability. Some tax topics or situations may not be included as part of this service. View full TaxAct Xpert Assist Terms and Conditions.
** TaxAct® Xpert Full Service: Xpert Subject to availability restrictions at TaxAct’s sole discretion. Provided service is complete with filing of prepared federal 1040 return and any necessary amendments or extensions and does not include access to other TaxAct products or features or returns with local or foreign filings or certain complex tax situations. View full TaxAct Xpert Full Service Terms and Conditions for further details.