If you are planning to get married or recently tied the knot, you may wonder what the impact is on your taxes. You probably heard of the "marriage tax." - An unofficial term for different parts of the tax code that may mean you pay more as a married couple than you would as two single taxpayers
It is not always bad news for married taxpayers, but here are five ways to be married may actually benefit you from a tax standpoint.
you can pay a lower total fee if one of you earns much less
If any of you made less money than the other tax brackets can work your favor when you get married and file joint returns. that's why.
the tax code is written so that people who make more money pay a higher percentage of their income in taxes. taxpayers who do very little to pay a smaller amount of federal income tax.
If a person in a file income tax brackets together with someone in a high tax bracket the much lower income, all income is taxed at a rate somewhere between -. usually resulting from a total tax much lower than they were paying two single taxpayers
whole deposit can help you claim deductions and other tax benefits
Sometimes you can take deductions on a joint statement that you can not get otherwise. For example, say you have a business loss for the year and little or no other income.
You can not get a tax benefit of your loss this year. If your spouse earns a good salary or other income, on a joint statement of your business loss helps offset that income.
We recommend never lose money as a tax strategy, but if you have a business loss, it's nice to have a tax benefit of it. Other deductions and credits may be restricted by lower levels of income when you file as a single person.
For example, you can generally deduct up to 50 percent of your adjusted gross income for charitable contributions of the most common charities. As a single person, if you make a significant contribution in a year you make less income, the total amount you can deduct is lower.
However, if you are married and file a joint return, your income is combined with that of your spouse, so that the amount of the total allowance for the same large charitable contribution will probably be higher, helping you save more on taxes.
on the other hand, your income as a single person possibly high for certain tax advantages. Say you want to take the American Opportunity Credit for educational expenses.
For 2015, the credit begins to eliminate when your adjusted gross income reaches $ 80,000, and disappears when your income is $ 0,000. If you were married filing jointly, these removal numbers are $ 0,000 to 180,000 $.
If one of you earns less, you are more likely to qualify for the credit.
unlimited gift giving and survival rights
If you are not married and your significant other gives you more than $ 14,000 per year (in 2015), he or she must file a income tax on donations. (But there is probably no gift tax due ,.)
After you marry, assuming you and your spouse are US citizens, you can give each other as much as you want without tax consequences.
Similarly, if your spouse is a US citizen, you can leave as much money as you want it when you die without generating the estate tax. Special rules and limit amounts for non-US joint
Double excluding gain personal residence. - Even on a house that only one of you has
If you own a home that has increased in value, as a single person you may qualify to exclude up to $ 250,000 of gain from your income.
as a married person, you can exclude up to $ 500,000 of income. To qualify for this exclusion, you usually have to own and live in the home for two of the last five years or experience an exception as a job transfer.
What if you owned the house yourself before you married or if the house was in one of your names? If you are married when you sell the house, one of you must meet the test of the property for exclusion.
You both must meet the residency period to exclude up to the full $ 500,000 of the gain from your income. however
Just file a single return - not two
It should save you time and trouble to file a single tax return between the two of you. This is especially true if you combined finances before you get married and then had to sort them back again for tax purposes.
Now you will not have to worry about details such as who paid property taxes or charitable non-cash contribution was to you or the other person.
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