Once you get married, you can choose to file jointly or separately. For many married couples, filing jointly has a significant positive impact on their finances. Some couples choose to get married sooner rather than later to take advantage of tax breaks. A few are better off filing separately. Depending on your situation, getting married can help you pay less in taxes in the long run and should be discussed with a tax professional.
Filing jointly when one spouse makes significantly more money than the other can be a huge advantage. When filing jointly, the standard deduction doubles. If the standard deduction is $5,000 for an individual taxpayer, the standard deduction is $10,000 for married filing jointly. If one spouse earned $50,000 for the year and the other earned $2,000 for the year, it's almost as if each spouse is earning $26,000. A $10,000 deduction is taken out despite the fact that one spouse earns more money. If they filed separately, most of the standard deduction for the spouse who earned $2,000 wouldn't be used.
There is a possibility of a marriage penalty depending on your income situation. Due to the doubling of the standard deduction and adjustments in the tax brackets, most couples don't have to worry about this. These adjustments were enacted to minimize such penalties. However, those who have much higher income are pushed into higher tax brackets that haven't been adjusted completely for two people. These couples may end up paying more in taxes filing jointly than if they filed separately.
Married couples save tax money on more than just income tax. If you're selling your home, as a married couple you will get a double tax break. If the married couple has lived in their home for at least 2 of the last 5 years of ownership, $500,000 of profit can be excluded from taxes whereas only $250,000 can be excluded for single individuals. For those who don't have homes with a large profit margin, this is negligible, but couples who are selling for a large profit can save a significant amount on taxes if they file jointly.
Some people get married looking forward to the tax benefits. Most married couples will benefit from filing jointly due to the many tax breaks available when filing jointly. The best way to pay the least amount in taxes possible is to analyze your situation thoroughly. How much would you pay if you filed jointly and how would you pay if you filed separately? Most likely, filing jointly is the best way to go, but if you're concerned because both you and your spouse have substantially high incomes, experimenting with both ways is a smart decision. As always, your personal tax situation should be discussed with a tax professional.
If you are a military member, according to the IRS, military members and their spouses may be eligible to receive free tax return preparation assistance. The IRS and U.S. Armed Forces participate in the Volunteer Income Tax Assistance program which provides free tax advice, tax preparation, return filing and other tax assistance to military members and their families.
"Military Personnel and their Families Get Free Tax Help!" page on the IRS website.
The information in this article is intended for educational purposes only. This information should not be considered tax or legal advice. Individual circumstances vary. Please seek the advice of your accountant, tax professional, and/or legal advisor for answers to specific questions and to review your individual circumstances.