When thinking about marriage tons of things cross our minds – the wedding, the honeymoon, moving into together, children, and the future – just to name a few. One thing that isn’t typically thought of until a little later is taxes. Yes, marriage affects those too. Before you get worked up or worried though take a deep breath and relax. While there are some specific considerations married filers need to take into consideration, there are also many tax advantages that only present themselves once the knot has been tied. Here are a few of the important ways getting married affects your taxes.
This is the most obvious thing that changes on your taxes once you get married. From here on out the only filing statuses that you’ll be able to use on your tax returns are married filing jointly or married filing separately. This status isn’t determined until the very last day of the year, meaning that it doesn’t matter if you weren’t married for the majority of the year, you still do not have the option of filing as single if you are married as of December 31. More often than not married filing jointly will be most beneficial to couples. This option tends to offer deductions and credits that aren’t available to couples that choose to file separate tax returns.
Tax brackets are used to determine the highest rate of tax that is imposed on your income. These brackets differ for each separate filing status. This means that your income may not be taxed at the same rate it was before you got married and you filed as single. As a married couple filing a joint return your income is combined – which may end up bumping one or both of you into a higher tax bracket than you were previously.
Penalty or Bonus
When you think of tax returns and penalties the only thing that comes to mind is probably being penalized because of mistakes made while filing. However, one penalty that couples may need to be concerned with has nothing to do with that. It’s simply the marriage penalty. Some dual-income couples may find that their combined tax bill is larger than it was when they were filing singly. Unfortunately this means that their return is going to be negatively impacted. On the flip side there is also a marriage bonus. This takes place when there is a large gap between the income of the husband and the wife. If this is the case then your return could be positively affected.
These are only a few of the most prevalent ways that getting married affects your taxes. Knowing what to expect when tax season comes around and doing your research ahead of time can save you from any unwanted surprises. Filing a joint tax return doesn’t have to be a scary thing, and for many couples they actually come out surprised with how well it turns out for them.