Newly married couples may have access to a variety of tax breaks depending on whether they file jointly or separately, as these tax tips will reveal. Enjoy your wedded bliss even more with the help of this video on tax basics.
Hello, I'm Victoria from TurboTax with some important information for newlyweds.
Did you just get married this year? If so, I'm sure that taxes are the last thing on your mind. However, your new status can bring you lots of tax savings--perhaps even enough to pay for your recent honeymoon.
The first thing you and your spouse must decide on is whether to file as married filing jointly or married filing separately.
In most cases, filing a joint return with your spouse will save you the most in taxes.
Here’s a general example. Suppose you and your spouse file separate returns and you have $90,000 of taxable income and your spouse has $10,000. By filing separately, the tax bracket for each income level is applied. $90,000 will have a higher tax bracket than $10,000.
You may end up paying more by filing separately because the $90,000 in income was taxed at a higher rate.
However, if you file jointly, the combined income of $100,000 moves into a lower tax bracket. This is because the IRS views each spouse as earning half the total income which essentially keeps more income in lower tax brackets.
Because of the lower tax brackets you and your spouse will enjoy, it may be a good idea to evaluate whether either of you should reduce the amount withheld from your paychecks on your W4s. This will make your tax refund smaller but it will put more money in your paychecks throughout the year.
Turbo Tax has a free W-4 Withholding calculator that can help you estimate.
Another great benefit of filing jointly is the raised limit to charitable contributions that may be deducted in a year. This means if one makes a large charitable contribution but doesn't have income of at least double that amount, they can use their spouse’s income in determining their deductible amount – meaning they save current taxes instead of having the contribution carried over to the next year.
For more tax tips and guidance, visit TurboTax.com.
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