It’s often said that some of the benefits of getting married—besides spending an eternity with the one you love, of course—are the tax perks. But what exactly does that mean?
Unless you’re super into tax law, it might not be obvious what the differences will be once you’re married. But if you’re planning a wedding, or considering getting married for the financial benefits, it’s good to know ahead of time what to expect.
Here’s good place to start, courtesy of some tax experts.
When you get married, “your filing status will change…, which has tax implications,” said David Bakke, a personal finance expert at Money Crashers. “Your two main choices are married filing jointly and married filing separately. There are advantages and disadvantages to both, depending upon your personal financial situation (of both parties).
“Your best bet here would probably be to consult with a qualified tax professional.”
There are perks to filing your taxes together, like access to credits and deductions you don’t have as a single person, said Jai Kumar, marketing manager at PriorTax.
“If you choose to file jointly, the process of doing so is less time-consuming and generally less expensive,” Bakke said. “And you’ll also get an additional exemption if you choose the married filing jointly route. And what most people find when they get married is that itemizing deductions makes more financial sense, something else that you can look forward to.”
If you’re big on charitable giving, you’ll be able to write off more if you file jointly as a married couple.
“Your charitable contribution deduction limit goes up, meaning more of those contributions can be written off,” Bakke said.
“By federal law, if one partner dies, the estate can transfer to the spouse and the estate would be exempt from any federal taxes,” Kumar said.
If one of you is losing money, it could benefit you both, tax-wise.
“Negative numbers of one person in a marriage can help both spouses,” said Tiffany Welka, accredited wealth management advisor and vice president of VFG Associates. “The spouse who is losing money may not want to take advantage of some deductions, including those dealing with the house, but the spouse who’s making more money may use the loss as a tax write off.”
If one of you is between jobs, filing jointly means the spouse without a job can still contribute to an IRA.
“A spouse may contribute to an IRA even if he or she doesn’t work, as long as the other spouse has earned income,” Welka said. “This is known as a spousal IRA contribution.”
Most of the time, “claiming an additional allowance or changing withholding to the ‘married’ rate on your Form W-4 means that less taxes are withheld from your pay,” Welka said.
However, something to look out for: If your combined income bumps you into the next tax bracket, you’ll be responsible for paying more taxes on it.
“When couples get married, each party will need to fill out a new W-4 for withholding purposes,” Bakke said. “But this shouldn’t be taken lightly since your combined income may bump you up into a new tax bracket, which means you’ll owe more at the end of the year. Make the right choice when filling out the new form so you have neither too much or too little taken out of your weekly paychecks.”
“If your spouse owes back taxes, even if from before you were married, and you elect to file jointly, your tax refund may be intercepted to pay for your spouse’s debt,” Mississippi-based attorney Randall R. Saxton said. “While your refund may still be intercepted if you file individually, in this situation, you will be eligible to apply for injured spouse status to receive your refund.”
Even if one of you took on the task of filing for both of you, “when you sign the joint return, you are (both) fully responsible for every number that’s on it,” Welka said. Double- and triple-check its accuracy to avoid issues with the IRS.
Better yet, work with a tax professional who can lead you through the process and help you make the right decisions for your unique relationship, financial situation and goals.
In fact, you should probably talk about it earlier in the relationship than you think.
“Couples about to marry need to recognize the value of knowing the financial well-being of their intended before marrying,” said Steven J. Weil, president and tax manager at RMS Accounting. “Do they owe the IRS? Have they filed their tax returns? Joining hands in front of the minister is one thing, but sharing their tax debt can be quite another.
“Being in love should not include being blind to financial responsibility.”
Katie Moritz is Rewire’s senior editor and a Pisces who enjoys thrift stores, rock concerts and pho. She covered politics for a newspaper in Juneau, Alaska, before driving down to balmy Minnesota to help produce long-standing public affairs show “Almanac” at Twin Cities PBS. Now she works on this here website. Reach her via email at [email protected] Follow her on Twitter @katecmoritz.