TAXES AND MARRIAGE
One of the most impacting changes marriage has on
your personal status (as well as your spouse's) is
taxes. As long as you are legally married as of the last
day of the tax year, you are considered married.
Therefore, the IRS considers you married for the full
year even though you got married on December 31st.
Many couples are under
the impression that once they are married, they must
file taxes together with their spouse. This is not true.
There are two available options: married filing jointly
or married filing separately. Your personal situation,
will dictate which option would be best you should do,
i.e. combined income.
Filing separately
The following adverse tax implications include:
- You may not be qualified for specific credits, i.e. education credit
and the earned income credit .
- A spouse that is not employed will not be able to make contributions
towards an IRA.
- Even though you may receive a federal refund, you may end up owing a
great deal in state taxes.
Filing separately may be beneficial if one spouse owes
money to the IRS and the other is due a refund. Also, if
one spouse has considerable medical costs, casualty
losses and/or miscellaneous deductions that must meet a
percentage-of-income threshold before they can be
claimed, then filing separately will result in tax
savings.
It is also important to note that if wife and husband
are filing separately, the same method for claiming
deductions must also be used. If one itemizes, both must
itemize.
Filing jointly
This type of filing is a more frequently method for
married couples.
- If there is difference in the two incomes, you have a lower tax
liability.
- There is the likelihood for the eligibility for many credits, including
education and dependent-care expenses.
- Filing one tax return instead of two is simpler.
Marriage tax penalty
Another great advantage for filing jointly is the recent
reduction by legislation of the marriage tax penalty. In
the past, filing a joint tax return resulted in married
couples paying more than if they were to file their
returns as single taxpayers.
The mind-set behind the marriage tax and standard
deduction was that married couples share expenses,
resulting in less expensive living costs when compared
to two singles, even if the same amount of money is
made. As a result, the single filers, received more
generous per-person deduction.
Then there are the income tax brackets. Formerly, the
income of married couples was taxed at higher rates than
single taxpayers. In addition, their combined income on
a joint return typically propelled them into even higher
tax brackets.
The impact of marriage tax penalties have been eased as
a result of tax laws that were changed in 2003. As a
result, the amount of eligible
standard deductions for those filing jointly is double
that of single taxpayers. Also, the total of a
couple's income that falls in the 15 percent bracket is
double the income range of a single filer. In essence,
these changes tax more of a couple's joint income as if
they each were filing as single taxpayers.
