What Are the Tax Benefits of Marriage? And Other Newlywed Tax Questions, Answered
'Tis the season—for taxes. Listen, we know shuffling through IRS forms and deciphering a new tax code is one of the least enticing ways to kick off newlywed life (especially if you just returned from your honeymoon and finally wrapped up thank-you notes). But the tax benefits—yes, tax benefits—of marriage may sweeten the deal. If you haven't already, it's time to get down to business filing your first tax return(s) as a married couple. Have questions? Here's what you need to know about married tax brackets, marriage tax breaks and more. Consider this a 101 on how marriage affects federal taxes.
Start early and determine your married tax bracket.
First things first: Don't procrastinate. Prepping in advance makes everything easier, especially if you have no idea about the differences between single versus married taxes. "It's complicated and requires a little bit of attention beyond just saying, 'Okay, we've got to do our taxes and get started over the weekend,'" says Jeff Motske, president and CEO of Trilogy Financial and author of The Couple's Guide to Financial Compatibility. "Keep both an electronic file and a paper file and continue to look at them [and] put things in there, but don't wait until April. Open it up in January when you start [receiving] important information [like your W-2 forms, for example]."
We've told you before how crucial it is to have the money talk before getting married, and this continues long after you exchange rings and vows. Motske also recommends scheduling a monthly financial date night so you're consistently on the same page. "If there's one thing I'd encourage all couples to do, it would be to be transparent about their money and determine what their budget is," he says. "Once they figure that out, they can figure out the tax aspect of it as well. Taxes need to be calculated into your budget too."
It helps to know your married tax bracket, whatever that may be. You have two filing options postwedding: jointly or separately. "Married filing jointly" tax brackets apply to your combined income, while "married filing separately" tax brackets apply to your individual income. Which you select depends on your specific circumstance—more on that below. Knowing your bracket(s) helps you understand the rate at which you're both taxed. That can influence financial planning and make tax return surprises (such as owing extra money) less likely.
It's easy to find your married tax bracket. Check out this handy H&R Block tax bracket guide, which shares the most recent federal tax brackets and explains how they work. Or use TurboTax's tax bracket calculator.
Know the marriage tax benefits of filing jointly…
The tax benefits of marriage depend on how you file. "Most [married couples] file together, and in most cases, filing jointly works better than filing separately—but everybody's scenario is case by case," Motske says. Filing jointly basically means you're sharing tax liability, and in turn, submitting one tax return together.
But what exactly are the tax benefits of marriage if you file together? First off, married couples filing jointly qualify for the highest standard tax deduction. And according to TurboTax's guide to filing jointly or separately, they're often eligible for extra tax credits too. Plus, because of the way "married filing jointly" tax brackets are structured, you may get a "marriage bonus." If one spouse's income is more than the other's and they file jointly, the higher earner could potentially owe the government less than if they filed separately. (Essentially, their partner's income may lower their tax bracket.) Of course, it goes the other way too—that could increase the lower earner's tax rate. Do some math to determine what would happen in your specific situation.
...and the marriage tax benefits of filing separately.
Can married couples file taxes separately? Yes. "One benefit of filing separate tax returns would be tax liability—in other words, filing separately so you don't assume someone else's tax liability right away. So, if one of you has had some problems in the past, you might want to be careful there—that's why transparency and understanding what goes on with your partner's finances is so important," Motske says. There's also the possibility of what's called a "marriage tax penalty"—infrequently, filing jointly can actually put you both in a higher tax bracket than if you filed separately. (This really only happens if both spouses were originally in one of the higher tax brackets.) Note that these are just a few of the possible tax benefits of marriage if you file separately.
Talk to an expert.
When it comes to questions and confusion over your tax return—which can become even more complicated once you're married—hiring a pro to walk you through the process is worth it. "I always encourage people to see professionals. Just like you'd go to the doctor or dentist—the same goes when it comes to your finances and taxes. Especially after a big expense like a wedding, [newlyweds] are just burnt out financially by the time tax season comes around, and they're not quite ready to go back into that space," Motske says. "That's where I think a professional can come in and be unbiased and make the process as painless as possible. Seeing someone who's able to answer your questions, run your scenarios multiple different ways and know the tax codes better than software is so valuable."
That said, even online tax filing comes with an in-person aspect nowadays. If you use TurboTax or H&R Block, for example, you can still request help from experts through live chats. TurboTax even offers line-by-line tax return reviews with a CPA or EA.
Rethink your refund.
So you've gotten through tax season and you wound up with a refund—now you have to decide how to use it together. "I always advise people to put it to work for them," says Motske. "Make sure you're putting those tax savings somewhere meaningful, whether it's [saving up to] buy a house or pay off some debt."
Motske also advises couples to stop thinking about their refund like a big bonus or a gift—you know, like your vacation or shopping money. "If you're getting a massive refund, that's a huge mistake," he says, since it means you're overpaying on taxes throughout the year, which isn't a very beneficial use of your hard-earned cash. "You should be getting that money in your paycheck every single month and putting it to work [saving for retirement, building an emergency fund or paying down debt], instead of letting the government earn interest on it before getting it back."
Don't forget about housekeeping.
Once you're married, file a new Form W-4 with your updated newlywed status (this is the tax form you received from your employer so they can withhold the correct federal income tax from your salary). That way you can claim additional allowances and change your withholding rate to "married"—which means you'll get a larger paycheck every month.
If you changed your name after marriage, let the IRS know stat. Any discrepancies between the name you use and the name they have on file could interfere with your tax return. According to the IRS website, the best way to notify them is through updating your Social Security card.
The Knot Worldwide, Inc. and its affiliates do not provide tax, legal, financial, accounting or similar advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial, accounting or similar advice. You should consult your own advisers before engaging in any transaction.
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Updated February 2020