Tax Implications of Marriage

Jul 28, 2015

Thus far, the summer of 2015 has had its moments of sunshine but have you noticed all the…… WEDDINGS? I bet you thought I was going to say rain. This is generally the time of year when couples decide to wed. If you recently tied the knot or are planning to sometime this year, this article is for you. Sure, there is plenty to look forward to as a married couple, but have you thought about all of the fantastic tax benefits? There are incentives specific to W-4 withholdings, itemized deductions, and your filing status.

Tax planning as a married couple is just as important as it was when you were single. When tax day finally arrives, you want to make sure you are not going to be way overpaid on your taxes. Even though receiving a large refund is nice, it is money that could have been invested elsewhere. As you know, a dollar today is worth more than a dollar tomorrow. By increasing your W-4 allowances, you can decrease the amount of withholdings from your wage. This would be especially important if you or your spouse decides not to work after getting married, as you would be living off one income while being able to capitalize on the benefits of being married. For the 2015 tax year, the standard deduction for taxpayers filing jointly is $12,600, and personal exemptions are $4,000 apiece.

Wedding2As a married couple, you may be able to itemize your deductions if you haven’t already done so in the past. Once you begin to pay real estate taxes, mortgage interest and are able to donate more to charity, your itemized deduction total may exceed the standard deduction of $12,600. Contact your personal tax planner to see if making an additional mortgage payment or donation to charity will put you over the standard deduction threshold.

Another question to ask yourself is whether or not it will be beneficial to file separately instead of jointly. Of 56 million married tax returns filed in 2009, only 4% of those returns were separately filed. However, filing separately with similar incomes will provide you better opportunity to claim medical expenses and miscellaneous deductions, which are deductible dollar-for-dollar only after exceeding 10% and 2% of your Adjusted Gross Income (AGI), respectively. Speak with your friendly neighborhood accountant to figure out what tax planning strategy works best for you!

By: Jason Wenner, Staff Accountant

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