This document provides information on marrying finances and financial planning for married couples. It discusses evaluating your current financial condition by reviewing credit reports and creating income and expense statements. It also covers developing both long-term and short-term financial goals. Additionally, the document compares community property states versus common law states in terms of owning debt and property when married. Finally, it provides seven tax tips for married couples, including choosing the correct filing status and potential disadvantages of filing taxes separately.

1. Marrying Your
Finances
The WII Group, LLC
Jeff Wilson II, CPA, CGMA, AFC
Personal Finance Counselor
Presented at Mt. Ennon
Baptist Church

2. 8 Keys to Effective Business
Partnerships
1. Commitment to a common mission
2. Unselfishness
3. Complimentary Communication
4. Ongoing Communication
5. Acceptance of Differences
6. Forgiveness
7. Fairness
8. Trust

3. “ There can be no freedom or
beauty about a home life that
depends on borrowing and debt.”
-Henrik Ibsen

4. Rule # 1
Financial responsibility means that you
are accountable for your future
financial well-being and nobody else.

5. ACHIEVE
INVEST in Mutual Funds Stocks and Bonds Real Estate Retirement Plans
HANDLE the Credit Cards Installment loans Savings Account Education costs
Housing Expenses Transportation
expenses
Insurance
expenses
Income taxes Contingencies
MANAGE the
Long-term goals Short-term goals Organized
financial records
Realistic budget Emergency savings fund
ESTABLISH
Checking Account Savings Account Money Market
Account
Insurance
protection
Employee benefits
Create a
BASE
FOUNDATION
Use of regular income to provide basic lifestyle and savings
Financial Successful
House
Building a House of Love

6. Topic Areas
1. Financial Planning
2. Community vs. Common Law
3. Income Taxes

7. Financial Planning: The Process
1. Evaluate your financial condition
2. Define your financial goals
3. Develop a plan of action to achieve your goals
4. Implement your plan
5. Review your financial progress and make
changes as appropriate (every 3 months)

8. Financial Planning: Evaluate your Financial Condition
1. Before the wedding , reveal everything in your financial
closet (NO skeletons).
2. Order a free copy of your credit reports
(www.annual creditreport.com)
3. Set preliminary financial goals both long and short
(goals are likely to change after step #3)
4. Develop Personal Financial Statements
(optional: with help of Financial Counselor or Financial
Planner)
 Create an Income Statement/Financial Portrait-(past)
 Develop a Balance Sheet/Financial Portrait (present)
 Household Budget Planner/Zero-Based Budget (future)

9. Financial Planning: Set Preliminary Financial Goals
FinancialPlanAreas Long-termGoalsandObjectives Short-termGoalsandObjectives
ForSpending
Evaluateandplanmajorpurchase Purchaseanewcanintwoyears Beginsaving$200amonthforadownpaymentofacar
Managedebt Keepinstallmentdebtunder10% oftake-homepay Payoffchargecardsatendofeachmonth
ForRiskManagement
Medicalcosts Avoidlatemedicalcosts Maintainemployer-subsidizedmedicalinsurancepolicybypaying$135monthlypremium
Propertyandcasualtylosses Alwayshaverentersorhomeownersinsurance Makesemiannualpremiumpaymentof$220onrentersinsurancepolicy
Alwayshavemaximumautomobileinsurancecoverage Makepremiumpaymentsof$440onautomobileinsurancepolicy
Liabilitylosses Eventuallybuy$1millionliabilityinsurance Relyon$100,000policypurchasedfromsamesourceasautomobileinsurancepolicy
Prematuredeath Haveadequatelifeinsurancecoverageforboth Buylifeinsurance
Incomelossfromliability Buysufficientdisabilityinsurance Relyonsickdaysandseekdisabilityinsurancethroughprivateinsurance
ForCapitalAccumulation
Taxfund
Haveenoughmoneyfortaxeswithheldfromsalaries
bybothemployers Confirmthatemployerwithholdingoftaxesissufficient.
Revolvingsavingsfund
Alwayshavesufficientcashinlocalaccountstomeet
monthlybudgetsexpenses Developcash-flowcalendartoascertainneeds.Keepallfundsininterestearningaccounts
Emergencyfund
Buildupmonetaryassetsequivalenttothreemonths
takehomepay Put$150permonthintoanemergencyfunduntilistotalsonemonth'stake-homepay
Education
Maintaineducationalskillsandcredentialstoremain
competitive Bothtakeonegraduateclassperterm
Savings Alwayshaveanicesizedsavingsbalance
Investment
Ownsubstantialsharesofaconservativemutualfund
thatwillpaydividendsequivalenttoabout10%of
familyincome Startinvestinginamutualfundbeforenextyear
Retirement
Retireatage60orearlieronincomethatisthesameas
thetakehome-payearnedjestbeforeretirement
EstablishanIRAbeforenextyear.Contributethemaximumpossibleamounttoemployer-
sponsoredretirementaccount
Estateplanning Provideforsurvivingspouse Eachspousemakeawill

10. Financial Planning: Develop a Income Statement
Monthly Income Budget You
YOURS SPOUSE,
PARTNER, OR OTHER
CONTRIBUTING
MEMBER TOTAL
Employment (1) see notes 4,140.00$ -$ 4,140.00$
Overtime - - -
Child Support/Alimony (2) see notes - - -
Pension - - -
Interest - - -
Public Benefits (3) see notes - - -
Dividends - - -
Trust Payments - - -
Royalties - - -
Rents Received 1,250.00 - 1,250.00
Help from Friends or Relatives (HRSA loan repay)1,606.00 - 1,606.00
Other(List) 1,908.00 - 1,908.00
Total (MONTHLY) 8,904.00$ -$ 8,904.00$
MONTHLY INCOME BUDGET

11. Financial Planning: Develop a Income Statement
Monthly Income Budget You
YOURS SPOUSE,
PARTNER, OR OTHER
CONTRIBUTING
MEMBER TOTAL
EXPENSE TYPES (4) see notes
Payroll Deductions (5) see notes -$ -$ -$
Income Tax Withheld 175.00 - 175.00
Social Security - - -
FICA - - -
Wage Garnishments - - -
Credit Union - - -
Other - - -
Home Related Expenses 3,420.00$ -$ 3,420.00$
Mortgage or Rent (6) see notes 1,776.00 - 1,776.00
Second Mortgage - - -
Third Mortgage - - -
Real Estate Taxes (7) see notes - - -
Insurance (8) see notes 35.00 - 35.00
Condo Fees & Assessments 245.00 - 245.00
Mobile Home Lot Rent - - -
Home Maintenance/Upkeep - - -
Other 1,364.00 - 1,364.00
Utilities 379.00$ -$ 379.00$
Gas 60.00 - 60.00
Electric 90.00 - 90.00
Oil - - -
Water/Sewer - - -
Telephone: - - -
Land Line - - -
Cell 104.00 - 104.00
Cable TV 125.00 - 125.00
Internet - - -
Other - - -
MONTHLY EXPENSE BUDGET

12. Financial Planning: Evaluate Your Financial Condition

13. Financial Planning: Evaluate Your Financial Condition

14. Financial Planning: Financial Goals
FinancialPlanAreas Long-termGoalsandObjectives Short-termGoalsandObjectives
ForSpending
Evaluateandplanmajorpurchase Purchase anewcanintwoyears Beginsaving$200amonthforadownpaymentofacar
Manage debt Keepinstallmentdebtunder10% oftake-home pay Payoffcharge cardsatendofeachmonth
ForRiskManagement
Medical costs Avoidlatemedical costs Maintainemployer-subsidizedmedical insurance policybypaying$135monthlypremium
Propertyandcasualtylosses Alwayshave rentersorhomeownersinsurance Make semiannual premiumpaymentof$220onrentersinsurance policy
Alwayshave maximumautomobile insurance coverage Make premiumpaymentsof$440onautomobile insurance policy
Liabilitylosses Eventuallybuy$1millionliabilityinsurance Relyon$100,000policypurchasedfromsame source asautomobile insurance policy
Premature death Have adequatelife insurance coverage forboth Buylife insurance
Income lossfromliability Buysufficientdisabilityinsurance Relyonsickdaysandseekdisabilityinsurance throughprivateinsurance
ForCapitalAccumulation
Tax fund
Have enoughmoneyfortaxeswithheldfromsalaries
bybothemployers Confirmthatemployerwithholdingoftaxesissufficient.
Revolvingsavingsfund
Alwayshave sufficientcashinlocal accountstomeet
monthlybudgetsexpenses Developcash-flowcalendartoascertainneeds.Keepall fundsininterestearningaccounts
Emergencyfund
Buildupmonetaryassetsequivalenttothree months
take home pay Put$150permonthintoanemergencyfunduntil istotalsone month'stake-home pay
Education
Maintaineducational skillsandcredentialstoremain
competitive Bothtake one graduateclassperterm
Savings Alwayshave anice sizedsavingsbalance
Investment
Ownsubstantial sharesofaconservative mutual fund
thatwill paydividendsequivalenttoabout10%of
familyincome Startinvestinginamutual fundbefore nextyear
Retirement
Retire atage 60orearlieronincome thatisthe same as
the take home-payearnedjestbefore retirement
EstablishanIRAbefore nextyear.Contributethe maximumpossible amounttoemployer-
sponsoredretirementaccount
Estateplanning Provide forsurvivingspouse Eachspouse make awill

15. Prioritizing Savings and Retirement
• Contribute at a minimum 5% to 10% of salary to 401K, TSP, or
403-B retirement plans.
• Plan to save 8-10% of salary in savings; or have at least 6 months
of households expenses in cash savings
• Ensure that all of you risks which you cannot save for are insured
• Begin planning for your child's education with your retirement in
mind
• Avoid taking on “non mortgage debt” greater than 5% of your
gross salary
• Avoid eating out during the month
Financial Planning: Develop A Plan of Action

16. Prioritizing Credit and Spending
• Avoid using credit cards for purchases that you don’t’ have the
cash for
• Debts with collateral are almost always your highest priority
debts
• Creditors making the most noise are not necessarily your most
important creditor.
• Always pay family necessities first
• Do not move a debt up in priority because the creditor or
collector threatens suit
Financial Planning: Develop A Plan of Action

17. Community Property States vs.
Common Law Property States
Who Owns that Debt or Property, when your married??
 MD, DC, VA are all Common law property states
 Community Property – in most situations husband and wife
act as a “community” acquiring property and incurring debt as
unit
 Common Law States – the assumption is that property
acquired by the spouses together and held in both names is
marital property, while all other is separate
* Not what you think*

18. * Not what you think*
• Community Property- Community property is
liable for all joint debts (debts incurred for the
benefit of the community)
• Who Owes the Debts – If you live in a common
law property state, who owes what debt
depends on when the debt was incurred and in
some instances what the debt was for
Community Property States vs.
Common Law Property States

19. * Not what you think*
Debts Incurred Before Marriage
•All debts incurred by a spouse before the marriage
begins or after it has ended are that spouse’s
individual debts
Ex. James owes $3,000 on a Bose sound system
and XBOX he purchased before he married April.
The $3,000 is James’s separate debt, and only he
is responsible for it
Community Property States vs.
Common Law Property States

20. * Not what you think*
Debts Incurred During Marriage
•All debts incurred by the spouses jointly during the marriage
are joint debts. All debts incurred by one spouse during the
marriage and before permanent separation are separately
owed by that spouse unless any of the following is true:
1. The creditor looked to both spouses or considered both
spouses credit information before approving credit
2. The debt was incurred for family necessities, such as food,
clothing, or shelter
3. The debt was incurred for medical purposes (in some but
not all common law states)
Community Property States vs.
Common Law Property States

21. Income Taxes for Married Couples
Income Taxes
Seven Tax Tips for Recently Married Taxpayers
• Notify the Social Security Administration Report any name change to the
Social Security Administration so your name and Social Security number will
match when you file your next tax return. File a Form SS-5, Application for a
Social Security Card, at your local SSA office. The form is available on SSA’s
website at www.ssa.gov, by calling 800-772-1213 or at local offices.
• Notify the IRS if you move If you have a new address you should notify the
IRS by sending Form 8822, Change of Address. You may download Form 8822
from www.IRS.gov or order it by calling 800–TAX–Form(800–829–3676 ).
• Notify the U.S. Postal Service You should also notify the U.S. Postal Service
when you move so it can forward any IRS correspondence or refunds.
• Notify your employer Report any name and address changes to your
employer(s) to make sure you receive your Form W-2, Wage and Tax
Statement, after the end of the year.

22. Income Taxes
• Check your withholding If both you and your spouse work, your combined
income may place you in a higher tax bracket. You can use the IRS
Withholding Calculator available on www.irs.gov to assist you in determining
the correct amount of withholding needed for your new filing status. The IRS
Withholding Calculator will give you the information you need to complete a
new Form W-4, Employee's Withholding Allowance Certificate. You can fill it
out and print it online and then give the form to your employer(s) so they
withhold the correct amount from your pay.
• Select the right tax form Choosing the right individual income tax form can
help save money. Newly married taxpayers may find that they now have
enough deductions to itemize on their tax returns. Itemized deductions must
be claimed on a Form 1040, not a 1040A or 1040EZ.
• Choose the best filing status A person’s marital status on Dec. 31 determines
whether the person is considered married for that year. Generally, the tax law
allows married couples to choose to file their federal income tax return
either jointly or separately in any given year. Figuring the tax both ways can
determine which filing status will result in the lowest tax, but usually filing
jointly is more beneficial.
Income Taxes for Married Couples

23. Disadvantages of Married Filing Separately
Earned Income Credit
Child Care credit (unless spouses lived apart for last six months)
Education Credits
Lost Credits
Lost Education Benefits Student loan interest deduction
Tuition and fees deduction
Savings bond interest exclusion
Standard Deduction If one spouse itemizes deductions, the other must also itemize ( that
is, cannot claim the standard deduction)
Taxable Social Security A greater percentage of Social Security benefits may be taxable
unless the spouses lived apart for the entire year
IRA deduction and contributions phased out
Spousal IRA rules do not apply
IRAs
Net Capital loss deduction is limited to $1,500 per spouseCapital Losses
Sale of Home Gain exclusion is limited to $250,000 per spouse
In addition to the exemption phasing out, some high income
taxpayers must add an amount back to AMTI.
AMT Exemption
Income Taxes for Married Couples

24. QUESTIONS, COMMENTS, OR
CONCERNS?
Contact Information: Jeff Wilson II, CPA, AFC
Email: info@wiicpas.com
Web address: http://www.wiicpas.com