Joint filings don’t need to be confusing.

With all the excitement that goes into planning a wedding, the last thing on a couple’s mind is probably their taxes. But, if you got married in the past year, or plan to get married in the near future, tax season could be a little different for you. That’s because there are a number of tax advantages, different cut-offs, and rules married couples must follow when filing jointly.

Given how significant these changes are, we’ve got you covered by outlining in the below article our top five things to look out for when filing as a couple for the first time.

1. Be Aware of the Marriage Tax Penalty

When couples tie the knot, they have the choice to file jointly or separately. But, if filed together, there could be tax penalties. Penalties take effect if the joint return would have been more than what each person would be paying as a single filer.

But, depending on income levels, if the taxpaying spouses make different incomes, and one is significantly lower than the other, the lower-income earner could pull the higher-income earner into a lower bracket. In turn, reducing the amount that is owed and eliminates the ‘penalty’ for them.

2. The Marriage Tax Applies to Other Areas

There are a few other areas in which the marriage tax is applied. For example, joint filers may be fined an additional 0.9% of Medicare tax if their income hits $250,000. This is not a significant jump when compared to the $200,000 threshold for a single filer.

Additionally, certain itemized deduction amounts will remain the same regardless if couples choose to file separately or together. This means couples can’t go into tax season thinking they can double their deductions when certain items remain the same. 

3. Jobless Spouses Can Get an IRA

If a spouse does not work, they typically won’t be eligible to contribute to an IRA. But, for married taxpayers, the unemployed individual can get around this rule and contribute to an IRA using joint income. Meaning, couples filing jointly can contribute to two separate IRA accounts (one for each person) and receive the tax benefits that go along with each.

4. Your Spouse Could Be a Tax-Shelter

If your spouse is losing money, for example, their business is not doing well, they might not be able to take advantage of certain tax deductions. But that does not mean it is a total loss for the year. Instead, the spouse who is pulling in an income may be able to take those unused deductions by claiming their partner’s loss as a tax write-off on a joint return.

However, this scenario can be a tricky situation to make sense of which is why we recommend working with an accountant or tax professional. That way, you can ensure filings are correct and won’t incur additional fees or charges.

5. Marriage Protects the Estate 

Wealthier couples will be happy to know that their assets will be protected once they pass on. That’s because, under federal law, you can leave any amount of money to the surviving spore without worrying about estate tax being charged on it.

Ultimately, it’s up to couples to understand the tricky tax laws and filing systems that can make it difficult to file come tax season. That’s why it’s best to partner with a trusted team who can review your accounts to make sense of your filings.

If, you’d be interested in learning more, or knowing what support is available to you, give us a call at 407-328-5001.

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