Congratulations to all you newlyweds! With this new chapter, many opportunities will begin open up as the two of you work together on your dreams. While not as exciting as planning your lives together, filing your taxes jointly can be a way for you two to build up your finances. If you got married in 2015, there are some great reasons why you two want to file jointly rather than separately.
How Filing Jointly Can Be a Boost to Your Marriage and Money
- Bigger Tax Deductions: In general, joint filers get a larger standard deduction ($12,600 married filing jointly.) That means less of your income is taxable.
- More Tax Deductions and Credits: Many tax deductions and credits require you to file as married filing jointly instead of married filing separately in order to get them, like the Earned Income Tax Credit, Child and Dependent Care Credit, and education tax benefits.
- Larger IRA contribution deduction: You both may be able to sock away money in your IRA accounts through contributions up until the tax deadline and reap the benefit of a bigger tax deduction for both of your contributions.
How do You Choose the Best Filing Status?
Generally couples who file married filing jointly may be able to take advantage of what is known as the “marriage bonus” since tax rates are typically lower for couples filing married filing jointly and you are able to claim more tax deductions and credits together when filing married filing jointly. Some married couples who earn higher incomes may see a “marriage penalty” if they have high dual incomes which may bump them up into a higher tax bracket.
One of the ways to make sure you’re filing the best status is to run the numbers. If you file with TurboTax, you can put in both scenarios to see which one gives you the biggest tax refund. You can also use TurboTax TaxCaster to get a quick estimate of where you stand. It’s an easy way to get some peace of mind when it comes to taxes.
TurboTax will help you get all of the tax deductions and credits you’re eligible for as a married couple so you can keep more money in your pockets and be on your way to building your finances together.
Make This Year Your Best
If you two are looking to build up your marriage and your net worth, here are 5 tips you can start today to jump-start your joint finances.
- Know your numbers: Take 15-20 minutes and get a clear picture of how much of your money is coming in and going out. Mint makes it easy to figure out.
- Come Up with a Game-plan Together: Talk about 3 things you want to accomplish this year with your money. Do you want to go on vacation? Start saving for a home or business? Prepare for kids?
- Set Up Your Spending Plan: Automate your finances so your money is going towards what you want. It’s a fantastic way to make sure you stick to your plan.
- Have Money Dates: Keep one another in the loop with regular money dates. You don’t have to only talk about the finances – have fun reminding yourselves of what you’re working towards.
- Make Paying Off Debt a Priority: Do yourselves a huge favor and work on getting rid of your high interest debts. Once gone you can use that money for other goals like investing in retirement.
These tips have helped us pay off debts, build up savings, and contribute more for our retirement. I hope they give you two the boost you need with your finances and help reduce stress in your marriage. So, all you newlyweds out there: Are you filing jointly or separately? Why? How are you planning to maximize your finances this year?