Are you planning a wedding? It seems like everything changes once you tie the knot. You have to merge two homes into one, put into motion plans of building a family and yes, doing taxes together.
Of course, you still have the option of filing separately, but there are some advantages to filing jointly. Plus, the marriage tax can possibly benefit your financial situation. Continue reading to find out how getting married will affect your taxes.
5 Things Getting Married will Change — Including Marriage Tax
1. Your filing status
Here’s an obvious one — your filing status will change from “single” to “married filing jointly.” Even if you weren’t married for the entire year, you still have to file with this status. So, if you got married at any point during 2017, this change will be reflected on your current tax return.
2. Tax brackets
Your tax bracket determines how much tax you owe to the IRS, based on your earnings. If you’re filing jointly, your tax bracket changes since there are now two incomes counted.
3. Name changes
If either or both of you change your name after getting married, then you will need to file a name change with Social Security. Do this quickly, so you can file taxes using your new name.
4. Gift taxes and estate planning
The IRS offers a marital deduction, which allows you to make unlimited gifts to your spouse in the form of money or property, without incurring a gift tax. To qualify, your spouse must be a U.S. citizen. Learn more about the marital deduction.
5. Choosing to itemize deductions
After you get married, it may make sense to itemize your deductions rather than claiming the standard deduction. This allows you to claim deductions for things like your mortgage interest if you own a home. However, if your itemized deductions are less than the standard deduction, you’ll want to continue using the standard deductions. Keep good records throughout the year and save receipts so you’ll know which to use when it comes time to file!
The benefits of the marriage tax
You can take advantage of quite a few tax benefits once you’re married. For instance, if you or your spouse ends up being unemployed for a time, you can still have an IRA (individual retirement account).
Your spouse can also act as a tax shelter. Say your spouse has a business, but it’s losing money. In this case, the negative numbers can reduce what you owe in taxes.
Then there’s the charitable contributions deduction. Individuals have a limit to how much they can claim on their tax forms. By getting married, this increases the limit, so you can deduct more and get more in return.
Lastly, filing as a married couple can save you time and money because you’ll only have one tax return to prepare.
Need help with your taxes?
If your tax situation is complicated or you need help figuring it all out, contact VTax today.
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