1. Potential for a lower tax bracket for married couples
As a married couple, you may find yourself sitting in a lower tax bracket than when you were single. Your tax bracket widens when you’re married to fit both your income and your spouse’s income, sometimes resulting in lower taxes owed on net. You may not benefit from this effect if you are a particularly high-earning couple. [1]
2. Higher standard deduction and other deductions
Standard deductions are combined when married couples file jointly, resulting in a deduction that, while higher, evens out to about the same deduction per person as it would be for a single person filing. The real tax breaks for married couples come in the form of other deductions. Married couples may qualify for deductions like the Earned Income Tax Credit, American Opportunity and Lifetime Learning Education Tax Credit and others. A tax professional can help determine specific eligibility requirements. [1]
3. Less expensive and streamlined tax filing process
Filing jointly means one tax return, not two, potentially leaving you with less paperwork each year. In a process where every return requires a hefty amount of attention either from you or your CPA, joint filing can save a lot of time, and possibly money. [1]
4. Estate tax advantages
Being married may make it easier to protect the money in your estate. Couples generally do not accrue estate tax when they leave money to each other, allowing you to protect assets from estate tax when it is passed on as long as your spouse is still alive. [1]
5. Spousal IRA contributions
If you work and your spouse does not, marriage may make it possible for your spouse to still contribute to an IRA through joint income. This allows you to add to two separate IRAs, increasing the net amount you can contribute. [1]
6. Combined charitable contribution and gift tax limits
Every individual has a limit to the amount of charitable donations they can deduct from their taxes each year. This limit sits around 50 percent of your income. When you get married, this amount is increased if you file jointly, brought up by the combination of your income and your spouse’s. [2]
7. FSA contributions
Being married often means having access to your work benefits and your spouse’s, allowing you to pick and choose the best benefits. If one of you has access to a flexible spending account (FSA) for medical or dependent care purposes, you can reduce your taxable income by contributing to it. [2]
If you’re considering getting married, it’s important to think through all the issues that will be impacted. Learn how Nationwide can help ensure your property and valuables are protected.
