When agreeing to marry the one you love your first thought may not be how it will affect your taxes (at least we hope not)! However, after tying the knot, there are several potential benefits you may be able to reap if you decide to file jointly. Some of the benefits to be had will be spotlighted below.
Tax Bracket
There was a massive amount of complaints in the past coming from married couples, commonly referred to as the “marriage penalty”. Following these complaints, Congress took steps to make the tax bills for married couples filing jointly closer to the combined total they would have owed as single taxpayers. Dependent upon your income, there can still be a marriage penalty, however, if one of the spouses has a significantly lower salary, they may be able to pull the higher salaried partner down to a lower bracket, thus reducing their overall taxes owed.
Jobless IRA
A single taxpayer without paid work isn’t typically eligible to fund an individual retirement account (IRA). A married taxpayer, however, without paid employment may contribute to an IRA using joint income. To further this, eligible couples filing jointly, can make contributions to two separate IRA accounts (one for each spouse) and receive substantial tax benefits. Additionally, the point at which IRA benefits are phased out based on income is significantly higher for married couples than for singles.
Charitable Contribution Deductions
There is a limit to the charitable contributions that may be deducted in a year based on income, which is typically no more than 50% of your income. Having a spouse can raise this limit, here’s how. Typically if one taxpayer does not have income double their charitable contributions, the excess contributions will be carried over to the next tax year for the deduction. For those who are married, both spouses’ salaries are taken into account, allowing for a potentially greater amount to be deducted in the current year.
Estate Protection
Being married can help someone protect the assets they leave behind. Under federal tax laws, you are allowed to leave any amount of money to a spouse without generating estate tax. Therefore, this exemption can protect the deceased estate from being taxed, at least until the surviving spouse dies.
Wrap Up
These are just some but not all of the tax benefits married couples filing jointly may take advantage of. There are other benefits than those mentioned above, typically a bit more intricate to plan out and understand. If you are interested in finding out about some feel free to contact us!