Will Getting Married Change My Tax Situation?
Are you planning to get married or are getting married soon? If so, congratulations!
As you and your significant other plan for the big day and your life together, there is a lot to take into consideration. And as fun as planning your wedding may be, don’t forget about your taxes as well – just because you have hearts and flowers on your mind doesn’t mean that taxes will go into retreat!
The Marriage Penalty
Getting married and filing taxes jointly may raise your taxes if you both are high income earners. You’d think that the new tax law would take care of that so called “marriage tax penalty,” wouldn’t you? Well it may help, but only in part.
Under the new law, married filing jointly income tax brackets have been structured to be about double those for single filers, except at the top 37% tax rate. In addition, the new law lowers a number of the tax rates and also changes the income thresholds at which the rates apply. As a result, the marriage tax penalty now will affect mostly higher income earners. Couples with a huge difference in their incomes may see their taxes go down, resulting in a marriage tax bonus.
Limitations on Itemized Deductions
If you and your intended own a house, you probably have itemized your deductions when filing as single in the past. Under the new tax law, your tax deduction for state and local property taxes, state income taxes and sales taxes are limited to $10,000 total, per return.
So, if your combined state and local property, income, and sales taxes exceed $10,000, that will be the maximum you can deduct, even though individually as singles you may not have hit that ceiling.
Most married couples file tax returns jointly, since married couples filing separately are barred from many tax deductions and credits. And besides, it’s easier and cheaper to have one tax return prepared rather than two. That being said, you’ll want to file separately if your attorney advises you to do so to keep your income separate for purposes of child support or alimony issues.
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