Love and Marriage: Some Tax Benefits of Marriage

Family Wedding couple

Marriage does not only come with a life partner, but also with some tax benefits. A married couple that files a joint tax return will often find that their taxes owed are lower than that of their unmarried colleagues.

There are certainly exceptions to the rule, but most people with average incomes will see some benefits by being married and filing jointly.

These benefits are also extended to retirement plans because they offer various perks or opportunities for married couples to get a jump on retirement savings. Below are some unique tax benefits that married couples can enjoy.

Spousal IRA

Individual Retirement Accounts, or IRAs, help you to make contributions towards your retirement. One of the eligibility requirements for making a contribution to IRA is that you must have a taxable income. However, there is an exception to this rule for married couples who file joint tax returns with a spouse who has a taxable income.

According to this law, the spouse who has a taxable compensation is permitted to contribute to the IRA account of the spouse without a taxable income. This is referred to as Spousal IRA whereby the nonworking spouse funds their IRA using the income of their partner.

Marriage Tax Rates

If you’ve paid attention to tax rates before, you’ll know that there are clearly different tax rates for individuals and married couples filing jointly. For example, a single person earning $50,000 per year in 2013 tops out at the 25 percent tax rate. However, if this person marries someone earning $20,000 each year, their total income is $70,000, but their joint income will top out in the 15 percent rate as long as they jointly file their tax returns. In effect, you can together earn more money while paying a lower tax rate.

Tax Deductions

The IRS usually rewards all taxpayers with an automatic deduction on their taxable income. This is known as the standard deduction. When filing 2013 taxes, a single taxpayer will enjoy a standard deduction of $6,100 while a married couple that files their returns jointly would get twice this amount at $12,200.

Other tax savings are made through dependent and personal exemptions which stand at $3,900 each. Before the passing of the Economic Growth and Tax Relief Reconciliation Act of 2001, married couples enjoyed a standard deduction that was less than the amount for a single person multiplied by two. This was referred to as the marriage penalty, which was deemed as unfair to married people.

Thankfully, tax legislation reduced marriage penalties and increased marriage bonuses.   Plus there are plenty of opportunities for couples filing jointly to itemize deductions and go above and beyond the standard deduction. This becomes increasingly valuable when a couple buys a home and pays mortgage interest, have children that require day care, or have older children preparing for college.

Child Deductions

Many people in marriages are blessed with children. What some people don’t know is that children in a marriage increase your tax exemptions. In 2013, every member of any family gets a personal tax exemption of $3,900, regardless whether it is an infant. There is also the child tax credit whereby $1,000 is deducted for each child under 17 for spouses making less than $110,000 every year.

Sure, having children and getting married costs far more than these tax breaks, but when it comes to paying taxes you still want to get every tax deduction and credit you’re entitled to.

Comments (3) Leave your comment

  1. There is a simple way to file separately, just get unmarried. If you want to stay with this guy, (who sounds like a loser the way you describe him) well just pretend you are married, like so many do & then you can file as single. Only people who need to know are court, IRS & maybe welfare dept. Oh yes, & Affordable Care folks

  2. What should someone do in a situation like mine where we have been married for 14 years and use to file seperatly but 6 years ago we split up (he just moved out) and had a child with another woman who now is married and gets child support because he wanted to “save” the marriage and still be there for his daughter. Now we have a son who was “my choice to have” and he is being offset for old student loans from prior when we got together. I am trying to support my son and have my own bills but they are taking all my refund since we are married to pay his crap! I thought filing on w4 to get more out of each check but not sure how to do that when he makes 20k (less taxes withheld) and I make between 7-10k (more taxes withheld) I’ve just keep filing injured spouse but think I’m gonna be screwed either way this year. They need to fix it where we can file seperatly and I still get my credits!

  3. However, if family income is between 133% and 400% of the Fed poverty line, then the Unaffordable Uncaring Act has introduced a major negative consideration about being married. Simply, an unmarried couple filing separately will receive a combined subsidy well in excess of the subsidy they would receive if married and filing jointly. So people have a more complicated cost/benefit calculation before tying the knot … or considering untying it.

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