TurboTax / Tax Calculators & Tips / All Tax Guides / Family / 7 Tax Advantages of Getting Married

7 Tax Advantages of Getting Married

Updated for Tax Year 2016


OVERVIEW

Marriage can help reduce the tax burden for married couples who file jointly. Depending on the incomes, so-called marriage "penalties" can be avoided. If the taxpaying spouses have substantially different salaries, the lower one can pull the higher one down into a lower bracket, reducing their overall taxes.


There are many good reasons to get married -- true love and compatibility being among the best. No one would suggest that you tie the knot simply to acquire the tax blessings of the Internal Revenue Service. But the tax code does provide a few wedding gifts to those who say “I do.”

Bride and groom holding hands

Kevin O’Brien, who formerly taught in the School of Accountancy graduate program at the University of Denver; certified public accountant Libby Fay of Denver; and Valerie Antonioli, a Certified Financial Planner professional and investment adviser for Cherry Hills Investment Advisors LLC of Denver, offered tips for making the extended honeymoon a little sweeter when you prepare your tax return.

 


 "A taxpayer who couldn’t pay into an IRA when single can use the joint income to fund one and potentially put away thousands of dollars for retirement while receiving substantial tax benefits," says Kevin O'Brien.


For years, taxpayers complained about the marriage penalty. This occurred when spouses earned similar salaries, the combination of which pushed the couple into a higher tax bracket than they would have occupied if they were still single. Congress took steps to reduce that penalty, ensuring that the joint tax bill for married couples remains closer to the combined total they would have owed as single taxpayers, Antonioli said. Depending on the incomes, there still can be a marriage penalty. But if the taxpaying spouses have substantially different salaries, the lower one can pull the higher one down into a lower bracket, reducing their overall taxes.

Typically, of course, both spouses would prefer to have good incomes, but if one person has a substantial income and marries someone making little or no money, “that’s golden as far as getting some tax benefits,” said O’Brien, who now is chairman of the Business Ethics and Legal Studies Department at DU’s Daniels College of Business.

 

1. Your spouse may be a tax shelter

While O’Brien doesn’t advise anyone to seek out a partner specifically because he or she has a business that’s losing money, it's worth noting that the negative numbers of one person in a marriage can help both spouses. The spouse who’s losing money may not take advantage of some deductions, including those dealing with the house, but the spouse who’s making money may use the loss as a tax write-off. “This is also true of high medical expenses,” O’Brien said.

2. Jobless spouse can have an IRA

A spouse may contribute to an individual retirement account (IRA) even if he or she doesn’t work. Additionally, said Antonioli, the point at which the IRA benefits are phased out based on income are dramatically higher for married couples than they are for single people. 

"A taxpayer who couldn’t pay into an IRA when single can use the joint income to fund one and potentially put away thousands of dollars for retirement while receiving substantial tax benefits," O’Brien said. 

3. Couples may "benefit-shop"

If both spouses have benefit packages from their jobs, they can pick the most valuable benefits from the two plans, Antonioli said. So, for example, if spouse can have pre-tax money deposited in an IRA, meaning the deposit reduces his taxable income, and the other spouse can’t, they can put family money into an IRA for the second spouse, too.

The right mixture of benefits from two plans can increase a couple’s tax savings in other ways. Fay mentioned child care as an example. “If they have dependent children, they can benefit from using benefit plans such as dependent care plans,” Fay said in an email. “It is frequently the case that one of them may not have such a plan, but the other one does.”

4. A married couple can get greater charitable contribution deductions

There’s a limit to the charitable contributions that may be deducted in a year, based on income. Having a spouse can raise that limit, Fay said. “If one of them makes very large charitable contributions but doesn't have income of at least double that amount, the excess contributions are carried over [deducted the following year],” she noted. “In a jointly filed return, they can use the spouse's income in determining the currently deductible amount. So they save current taxes.”

5. Marriage can protect the estate

Being married can help a wealthy person protect the assets he leaves behind when he dies. Under federal tax laws, you can leave any amount of money to a spouse without generating estate tax, so this exemption protects the deceased’s estate until the spouse dies.

6. Filing can take less time and expense

This one is simple: If the spouses have to file just one tax return, there’s a good chance that it will take less time to assemble the paperwork -- at least for the one not doing the taxes -- and cost less to have it prepared.

7. Tax downsides to marriage

There are tax benefits to nuptials, but some drawbacks exist as well. They don’t mean you shouldn’t get hitched; just consider them unwelcome gifts, along with that third toaster oven and the cheap fondue set.

First, once you sign the joint return, you are fully responsible for every number that’s in it. If your spouse fudges a figure, you’re equally liable for the consequences. The University of Denver’s Kevin O’Brien noted that you aren’t responsible for your spouse’s mistakes or deliberate omissions if they happened in the years before you married or if you can prove that you didn’t know about them.

Also, it might be harder to reach the higher minimum percentages of income necessary to be able to deduct medical or miscellaneous expenses, given the combined income, unless one or both of you had significant expenses. And finally, if there’s a garnishment for an unpaid loan or child support against a spouse, a refund could be delayed or blocked, O'Brien said.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99$34.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/1040A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected in March. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax Self-Employed ExpenseFinder: ExpenseFinder™ is available year round as a feature of QuickBooks Self-Employed (available with TurboTax Self-Employed, see the “QuickBooks Self-Employed Offer with TurboTax Self-Employed” details below.) ExpenseFinder™ expected late January (late February for mobile app). ExpenseFinder™ not available from within TurboTax Self-Employed for people with certain types of expenses and tax situations including paying contractors or employees, home office or vehicle actuals, inventory, self employed health insurance or retirement, asset depreciation, sale of property or vehicles, and farm income. Availability of historical transactions for import may vary by financial institution. Not available for all financial institutions or all credit cards.
  • QuickBooks Self-Employed Offer: File your 2016 TurboTax Self-Employed return by 4/18/17 and receive your complimentary subscription to QuickBooks Self-Employed until 4/30/18. Activation required. Log in to QuickBooks Self-Employed by 7/15/17 via mobile app or at https://selfemployed.intuit.com/turbotax; e-mail address used for activation and log-in. Offer valid only for new QuickBooks Self-Employed customers. See QuickBooks.com for price comparison.
    • When you use TurboTax Self-Employed to file your 2017 taxes, you will have the option to renew your QuickBooks Self-Employed subscription. If you do not file with TurboTax Self-Employed by 4/18/18, you will have the option of renewing your QuickBooks Self-Employed subscription by 4/30/18 for another year at the then-current annual subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section.
  • Pays for itself: In order to pay for the price of TurboTax Self-Employed, you will need at least $600 in deductible business expenses. This calculation is based on the self-employment tax income rate for tax year 2016.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Expert Help, Tax Advice and SmartLook: Included with Deluxe, Premier and Self-Employed (via phone or SmartLook); not included with Federal Free Edition. Feature availability varies by device. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected in March. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Data Import: Imports financial data from participating companies. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2015 and higher) and QuickBooks Desktop (2011 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.