How Does Marriage Affect Your Taxes?

How does marriage affect your taxes? Understanding how marriage can alter your taxes can help make sure you get the most out of all available deductions and credits while minimizing any unexpected surprises.

Marriage is a milestone that many of us look forward to, but it does come with certain responsibilities and financial implications. One major area where marriage affects your taxes is in the filing status you choose when preparing your yearly tax return.

Learn how to make the most of your tax situation when you tie the knot and get a better grasp on how marriage affects your taxes.

Updating Your Tax Status After Marriage

Since your marital status is used in determining which tax forms and filing statuses are available to you, it’s important that you update your marital status with the Internal Revenue Service (IRS). This can be done by filing an amended tax return with the IRS after you get married. If you want to change your last name and address, you also have to report these changes to the Social Security Administration (SSA). 

According to the SSA, you have to fill out Form SS-5, or Application for a Social Security Card, and submit it to a local office with your ID and proof of name change. Your tax returns go through your Social Security number (SSN), so the IRS and SSA need to have your correct information. Additionally, make sure to update your Form W-4 with your employer after you get married, as this will ensure that the right amount of taxes is withheld from your paychecks.

Other steps include adjusting your withholding allowances with the IRS, updating any direct deposit information, and making sure to use the same name on all of your returns. This way, you can make sure that your filing is accurate and avoid any problems with the IRS. One thing to remember is to wait until after your changes have been confirmed before filing your return so that there aren’t any issues with the returns process.

Married Filing Jointly

There are two marriage filing statuses: married filing jointly and married filing separately. When it comes to taxes, the IRS views married couples as one unit, which is why most couples will benefit from filing a joint return. The main advantage of the joint tax return is that it allows a couple to combine their incomes and deductions so they can take advantage of different tax rates. This usually results in lower overall taxes than if each spouse filed separately. The IRS outlined the requirements for “Married Filing Jointly” status. On the last day of the tax year, the couple should be married and have lived together or lived apart but not legally separated. They can also be common law married. In cases where one of the spouses is deceased, the surviving spouse can file a joint return if they did not remarry before the tax year ended. With this filing status, both taxpayers must declare their income and are accountable for all the tax and interest or penalty due.

Married Filing Separately

The other marriage filing status is “Married Filing Separately.” This status is for married couples who choose to file and pay their taxes without taking into account their spouse’s taxes. If you select this filing status, you will not be able to claim any credits or deductions that require both spouses’ incomes. This can mean paying more in taxes since special rules and deductions are only available to married couples who file joint returns.

With this status, couples cannot take credits for childcare expenses or education deductions, and they may not be eligible for certain tax credits. While filing jointly can generate the lowest total tax rates for couples, married taxpayers may want to file separately when one of them does not want to be responsible for the other’s tax liability. There are also cases where filing separately can actually result in a lower total tax bill. For instance, when one partner has high medical expenses or business losses, separate returns may be more beneficial since a lower adjusted gross income can lead to more deductions.

Tax Benefits of Marriage

Marriage has certain tax benefits that can be advantageous, especially when filing jointly. When you file your taxes as a married couple, your income is combined and taxed at a lower rate than if you filed separately. Again, the IRS considers married couples as one unit, so they are taxed at the same rate as a single person. This can save you money on taxes and helps to simplify filing returns. Additionally, if you and your spouse have similar incomes, it’s beneficial to file together because of the way deductions are allocated.

Deductions like charitable contributions or medical expenses are applied equally between both spouses when filing jointly. So, even if one of you contributes more than the other, both will still get equal credit for those deductions. Moreover, certain tax credits and deductions are only available to those filing jointly. For example, you can take advantage of the Earned Income Tax Credit if you file together, as well as bigger deductions for student loan interest and more. Plus, if one spouse has a lower income than the other, they may qualify for additional credits or exemptions that would not be available if they filed separately.

Tax Changes To Be Aware of After Marriage

Your tax brackets may also change after you get married. When filing single, an individual’s tax rate is based on their own income level; however, when filing jointly as a married couple, your combined incomes are taken into consideration for the purpose of taxation. Depending on your combined income levels, you may end up in a higher or lower tax bracket than if you had filed separately as singles.

It is important to keep this in mind and calculate accordingly before making a decision regarding how to file. Combined incomes can also be beneficial when buying your first home. Married couples can use their combined income levels to qualify for higher mortgage amounts than if they were filing single. You must also be mindful of the marriage tax penalty, which is the additional taxes you may be required to pay as a result of combining incomes. The marriage tax penalty occurs when the combined incomes of a married couple puts them in a higher tax bracket than they would have been in if they had filed separately.

For Better or For Worse

Taxes can be a complicated process, whether you are married or single. When it comes to taxes, marriage is an important factor that can have a significant impact on your financial picture. Knowing how marriage affects your taxes and the available deductions and credits could save you money in the long run. It’s wise to review all of your options with a certified tax professional so you can make sure that you’re taking advantage of every possible benefit when filing taxes as a married couple.

If you need any help or further advice, please get in touch today!