Married couples face some financial considerations that single individuals simply don’t. For example, married couples can file their taxes as married, either jointly or separately, at both the federal and state level. But does simply checking a different box on your tax forms guarantee a better outcome? Not necessarily.
If you both earn roughly the same amount, being married and filing jointly could bump you into a higher tax bracket. On the contrary, if one spouse earns little or no income and the other is the primary wage earner, filing jointly may result in paying less taxes. In other words, by tying the knot, you may wind up owing the IRS more or less than if you remained single. Your tax adviser can help determine the potential outcome for your situation.
Domestic partnerships and civil unions
Although a handful of states recognize domestic partnerships and civil unions, the IRS does not. So, while these designations may offer some of the same rights and responsibilities available to married couples, it’s only at a state level and on a state-by-state basis.
Benefits for married couples
Here are a few benefits married couples can enjoy, assuming both spouses are U.S. citizens:
Timing your marriage
If you’re thinking about marriage, choosing a wedding date that accommodates family, friends and employers — not to mention the venue and reception hall — can be a wedding planner’s greatest challenge. To complicate matters even more, should you also consider the IRS when selecting a date? Your tax adviser can help you decide, but here are some things to think about:
Your tax filing status is determined on Dec. 31 of each year. For tax purposes, that means even if you wait until the last day of the year to walk down the aisle, the IRS will consider you married for that entire year. If there is a notable disparity between your two incomes, getting married by Dec. 31 could benefit your tax situation. However, if your combined income pushes you into a higher tax bracket, you may want to wait to the following year to marry to avoid a negative impact on your current-year tax bill.
Income isn’t the only factor that influences whether marriage could impact your tax situation. Answering questions such as who incurs deductible expenses, who can claim children as dependents and what tax preferences you might qualify for can also help you gauge the potential effects of marriage on your tax situation — and help you determine the best time to exchange vows.
Our firm does not provide legal or tax advice.
This article was written by/for Wells Fargo Advisors and provided courtesy of Ponte Vedra Wealth Management Group in Ponte Vedra Beach at 904-273-7918.
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