Uncategorized Tax Implications of Getting Married Read the Article Open Share Drawer Written by asbbaines Published Jun 5, 2019 For most of us, the decision to get married is more about romance than finances. Money is only part of what creates a compatible couple. Yet it would be foolish to ignore the financial consequences of marriage – specifically, the tax implications. Smart couples face a number of key tax decisions that can save or cost them thousands of extra dollars per year come April. Today, we’ll review these important implications, as well as the tax perks available to married couples. File Jointly or Separately? The first tax question confronting any newly married couple is your filing status. You have two choices: Married filing separately Married filing jointly There are pros and cons for each. Couples who are married and filing jointly, for instance, may enjoy lower tax rates on their combined income. Married filing jointly also makes both of you responsible for what goes on your tax return: both spouses must sign. Generally speaking, there are more tax benefits to filing jointly, but there may reasons to file separately. If one spouse is self-employed and the other doesn’t want to be connected to the business, filing separately may be an option. Filing separately might also make sense if one spouse owes income taxes and it would threaten the other spouse’s refund to file jointly. Potentially Lower Income Taxes We noted above that married couples filing jointly qualify for lower combined income tax rates than couples filing separately. This is especially attractive to couples with differing levels of income. But this is not the only way marriage can impact the size of your IRS bill. A number of tax credits may only be claimed by couples who file jointly, including: Adoption Expense Credit Lifetime Learning Credit Another consequence to consider is that if you are married and filing separately – and one spouse itemizes their deductions – the other spouse gets a standard deduction of $0. This essentially forces the other spouse to itemize (whether they originally found this to be desirable or not) to avoid losing tax deductions altogether. Unlimited Marital Deduction One of the most powerful tax benefits available to married couples is the unlimited marital deduction allowing assets to be transferred to a surviving spouse tax free. Don’t ignore this. A freshly married couple in their mid-20’s might not be thinking about estate planning (it’d be a little weird if they were) but as the years pass, it will increasingly loom large in their future decision making. Exempt From Gift Taxes Married couples also get more bang for their buck when it comes to the gift tax exclusion. Currently, there is an annual federal gift tax exclusion of $14,000 per spouse for 2016 (meaning your recipient can “immediately and without restriction use, possess, or enjoy the gifted property” without tax consequence to you.) As a married couple, you get to combine this exclusion. As your wealth grows, be mindful of ways to use the gift tax exclusion to strategically transfer assets to loved ones (or between each other.) Child Tax Credit No tax benefit is more appealing to child-rearing couples than the Child Tax Credit. This credit, the IRS says, enables couples to reduce their taxable income by as much as $1,000 per every “qualifying child” they have. Six criteria decide whether your child qualifies: age, relationship, support, dependent, citizenship, and residence. The child must be under 17, not have provided “more than half” their own support, must be related to you (by blood, marriage, or adoption), a U.S. citizen, claimed as a dependent on your tax return, and live with you for over half the year. Don’t worry about knowing these tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your entries. Written by asbbaines More from asbbaines Browse Related Articles Planificación de Impuestos ¿Se te pasó la fecha límite para presentar tu declar… Planificación de Impuestos Mañana es la fecha límite para declarar impuestos: ¡… Planificación de Impuestos ¿Ya declaraste tus impuestos? Averigua qué registros … Trabajo por Cuenta Propia ¿Trabajas por cuenta propia? Revisa las fechas límite… Seguros Médicos ¿Cuándo se puede reclamar una deducción tributaria p… Reembolso de Impuestos Qué esperar cuando estas esperando… tu reembolso… Planificación de Impuestos Según el IRS, este año aumentaron los reembolsos de i… Ingresos e Inversiones Amigos con beneficios tributarios: ¿Trabajas desde cas… Deducciones y Créditos de Impuestos Maneras en que los cambios en tu vida pueden ahorrarte … Noticias TurboTax Cerrando la brecha de la educación financiera: Una mir… Los comentarios están cerrados.