Now that Valentine's Day is coming up, there are bound to be many proposals popping up. In fact, 10 percent of proposals are made on Feb. 14. If you're thinking of proposing on this holiday of love or currently engaged, there are a couple of practical tips you need to keep in mind to plan ahead. H&R Block senior tax adviser Richard Gartland offers advice for soon-to-be newlyweds:
Pick Any Filing Status — as Long as It's Married: "You are no longer eligible to file as a single, even if you didn't get married until 11:59 p.m. on Dec. 31. For tax purposes, the IRS determines your filing status as the last day of the year. A newly married couple has two filing status options, married filing jointly or married filing separately; however, a joint return often results in a lower federal tax. Some couples choose to keep their financial lives separate from their romantic ones, which means they would need to file a separate return from their spouse. Most couples filing separately have a higher tax liability than filing a joint return but may have an easier time attaining some tax benefits. For example, if you have one spouse with relatively high medical bills and lower income, it may be best to file separately. Medical expenses can be included in itemized deductions, but are only deductible to the extent they exceed 7.5 percent of your adjusted gross income (in tax year 2013 this increases to 10 percent of adjusted gross income for those under age 65). If one spouse has very high medical expenses and a low adjusted gross income, filing separately means that spouse could deduct more of these expenses. In contrast, if you filed jointly, your incomes would be combined, making it harder to deduct these expenses. Note: In some states, known as community property states, spouses generally split all income and deductions 50/50. In these states, it may not be as beneficial to file separately. Your tax professional can help you determine whether filing separately can be beneficial."