What are the Tax Benefits for Married Couples?
Newlyweds in Amherst, NH Have Questions
There can be some significant tax savings for married couples. While this is by no means the reason you should tie the knot, it is nice to start enjoying some of the tax benefits that can go hand in hand with marriage. Depending on the income from both spouses, getting married can put the higher earning spouse into a lower tax bracket. When filing your taxes jointly, this can offer significant tax savings over single individuals with the same level of income. The standard deduction is also higher for married couples, versus filing as a single individual. Having this deduction shared jointly can make a difference in the amount of taxes you pay by lowering your total income.
A newlywed couple in Amherst was feeling anxious about filing joint taxes for the first time. Wondering what changes they could expect as a married couple, they asked the team at Merrimack Tax Associates for their expertise.
Estate and Gift Tax Limit Doubled for Married Couples
Married couples can give away twice as much money as single individuals without having to pay federal gift and estate taxes. This allows the couple to give their child a combined tax-free gift of up to $36,000 per year. The couple can also gift friends or family members this same amount without being required to pay gift tax on the money.
Tax-Deductible IRA Contributions Increase
Married couples are able to invest more of their income into an IRA retirement account, realizing the tax advantages that go along with this investment. This means the family’s tax deduction is doubled by this larger IRA investment, giving them significant tax savings for the year.
Tax Advantages for Married Couples Increase When There is an Income Disparity
When the couple has one larger earner by a significant amount, this is where the tax advantages can be most seen. By balancing the total income between both individuals, this will likely bring a large amount of this income into a lower tax bracket. By having the money taxed at a lower rate, both individuals can enjoy the tax benefits that come with marriage and filing joint taxes.
The Amherst newlyweds were pleased to learn how marriage may affect their taxes going forward and can now plan for their first joint tax filing.