How Does Marriage Affect Your Taxes?
While a lot of fuss was made in prior years about the “marriage penalty” there have been steps taken by Congress to ensure that most couples are no longer paying a steep penalty for getting married. Specifically, the marriage penalty has been significantly reduced to ensure that couples who marry, in many cases, will not be paying a higher rate of taxes than they would if they were single. However, there are still changes to your tax filings if you are married, even if you marry on the last day of the calendar year.
New Filing Status
The most significant change you will face when filing taxes is your new filing status. Couples must determine whether to file their taxes married filing jointly or married filing separately. In most cases, a joint tax return will save you money; it is also important to be aware this also makes both parties responsible for any mistakes in filing.
Higher Standard Deductions
The Internal Revenue Service (IRS) allows every taxpayer a specific deduction. As a married couple, you’ll be able to claim twice the deduction if you are filing a joint return. The deduction can reduce your overall tax liability. Additionally, since both spouses can fund an IRA account (even when only one works) there is an opportunity to apply this credit to your taxes.
Lesser Paid Spouse Reduces Burden
If one spouse doesn’t work or makes significantly less than the other, it can help lower your income tax bracket. This will only apply if the couple files a joint return. Additionally, because couples also can deduct a higher amount of charitable donations, may have mortgage interest that can be deducted and other deductions they may not have qualified for when single, there can be a significant advantage to filing a joint return.
Less Expensive to File Returns
Because couples can file joint returns, the cost of filing your taxes should be reduced as a couple. Simply put, it is less expensive to file one return than file two separate returns which means lower costs and time savings. A tax filing professional can also help ensure you are getting all deductions you’re entitled to as well as help you determine whether you are getting the maximum benefit from IRA accounts and health care deductions.
While the last consideration you will probably make when you’re getting married is the impact it will have on your taxes, it is important to be aware of the changes you need to make. Newly married couples must file new W-4 forms with their employers (which will result in a lower payroll tax in most cases) and in some cases, name changes will also have to be submitted. Make sure if you are uncertain about what deductions you are eligible to take that you have a qualified tax preparation service like Rue & Associates help you with your tax preparation. Even if you are one of the millions of taxpaying couples who may still be subject to the “marriage penalty” the tax filing professionals at Rue & Associates can help make sure you are getting all the deductions and benefits of being married you are entitled to when filing your returns. Contact us today if you are searching for tax preparation support or tax services in Mechanicsville or the Richmond, VA area.