If you are wondering as to how marriages impact the lives of couples, we will walk through the financial – tax in particular – of a married couple in Baton Rouge, LA, so that you can have a good idea of what we are talking about here.
Life is full of events and decisions that change our way of living or our personality altogether. There are certain decisions in life that we make, like pursuing a subject in studies or choosing the state to move into in search of a better living standard.
Marriage is also one of such decisions, and although people think of marriages as a union of two persons, it is the most important and biggest life-changing event for the people involved. After tying the knot with the person you desire, regular filers’ next most important decision is to decide how they want to deal with their taxes.
The IRS allows couples to choose either filing separately or filing jointly, depending solely on the couple’s discretion. The decision depends on various factors, like the incomes of the partners, their possible deductions, and credits (if any) and so on. The majority of couples, as the data indicates, tend to file their tax returns jointly. This is because there are many benefits for ordinary couples if they file their taxes jointly.
Changes that Comes After Marriage in Taxes in Baton Rouge, LA
Married filing jointly qualifies for a huge standard deduction along with a higher income threshold for various tax breaks. Let us clarify this with a real-life example. Suppose Mr and Mrs X are married and they are filing taxes jointly. If Mr X has deductible medical expenses of $7,000, but he can also deduct $4,500 according to his AGI. The medical deductibles are allowed up to 7.5 % of the AGI. But since Mr and Mrs X is filing the joint returns, they can deduct the full amount of $7,000 from their tax because filing jointly increases their deduction limit up to $9,000. The definition and scope of all the benefits under married filing jointly are similar to this example.
Major Changes After Marriage if Filing Jointly
Here is the list of major changes that come with marriage if you decide to file jointly;
- Higher Tax Brackets: This is beneficial when one couple is earning high, and the other is earning low. The tax rate remains low as long as the combined income stays under the threshold.
- Marriage Penalty: Things don’t always end up favoring the married couple. Sometimes, the married couple has to pay more taxes when they are filing jointly. This is infamously known as the “marriage penalty.”
- Financial Gifts: Married couples are allowed five bigger financial gifts to friends and family. Parents can gift money to their children double than a normal person can, that too without triggering the taxes.
- If you also decide to change your name after the marriage, you have to inform the social security and IRS about the name change.
- Having a Child: your little one will bring a bundle of tax breaks, and you will be amazed to know what you can gain back after having a child.
Marriage is a wonderful thing, and it can make your life even more plentiful if you plan your taxes after marriage carefully. Married couples can enjoy various tax deductions, tax breaks and higher income thresholds. All they need to do is plan carefully.
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Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.