There’s generally a mix of excitement and fear around tax season. However, what if we told you that saying “I do” can actually have financial benefits? Joining forces with your spouse to file jointly can result in substantial tax savings. We’re here to explain the advantages of filing jointly.

1. Lower Tax Rates for Joint Filers

Married couples are warmly welcomed by the US tax system, particularly when it comes to tax brackets. You may be able to file jointly and save more money on taxes than two single people with the same total income. This is a positive financial development that may result in significant savings.

2. Double the Standard Deduction

You get to double the standard deduction when you get married. Married couples filing jointly can double the deduction available to single filers, therefore lowering their taxed income even more. It’s similar to an endless tax gift.

3. More Generous Tax Credits

In the world of taxes, tax credits are like gold, and they frequently go to people who say, “I do” and disclose their financial information. Married couples can access tax credits that can drastically lower the amount of tax due and, in certain situations, result in a refund. Examples of these credits are the Earned Income Tax Credit (EITC) and the Child Tax Credit.

4. Enhanced Retirement Savings

In addition to creating a life together, marriage also aims to protect your financial future. This can entail increasing your retirement funds if you’re a couple. Contributions to a spouse’s IRA and “catch-up” contributions for those 50 years of age and older become more accessible, enabling you to safeguard your golden years together.

5. Gift and Estate Tax Benefits

In addition to the regular financial benefits, marriage has tax advantages with regard to gift and inheritance taxes. You can transfer your fortune to your spouse without worrying about the impact on your taxes thanks to the limitless marital deduction. It’s a confession of affection as well as financial gain.

 

Common Questions

What if my spouse and I both have significant student loan debt?

Married couples with student loan debt have the option of selecting an income-driven repayment plan, which could result in lower monthly payments by taking into account the wages of both spouses.

Can married couples choose to file separately instead of jointly?

Yes, but since separate filing may limit some tax benefits, it’s crucial to assess if it makes financial sense.

How do I claim the Child and Dependent Care Tax Credit as a married couple?

Both spouses must be employed or looking for work in order to be eligible for this credit. Information regarding the costs of your care must be provided.

 

Now that you are aware of the tax benefits associated with marriage and joint filings, think about the possible savings and get in touch with PSA CPA for your tax needs, Our top priority is your financial security.