Here’s How Your Taxes Will Change After Marriage
Marriage as it turns out changes not only you but how you pay your taxes too. If you choose to change your name as well as your place of residence after marriage, this is one of the first changes your income tax return form will see. Make sure that the information you put in this form and the records at the Social Security Administration (SSA) is the same. Any of the above-mentioned changes related to marriage must be notified to the SSA.
This brings us to the next change, that of sliding up or down into a different tax bracket. Marriage usually brings about change in the tax rate at which you will pay your taxes. This will depend on the income that you and your spouse earn. If your incomes are more disparate, chances are that you will benefit in this aspect; you may end up in a lower tax bracket as the total annual income is now calculated as household income. However, if you and your better half earn salaries that are of similar amounts and on the higher end, you’ll end up in a higher bracket. Sad as it sounds, this often goes by the term “marriage burden”.
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Welcoming you now into your married life is the process of filing tax returns. No longer are you single, both in your life and your tax filing status. You must now file your returns as “married filing jointly” or “married filing separately”. While the terms are self-explanatory, you will have to read the terms and conditions properly to know more about the benefits and downsides. In most cases, filing tax returns jointly is the best option. Normally, one ends up paying at a lower federal rate while paying jointly than when paying single. Also, since you are jointly filing the taxes, you have to go through the hassle of filling out all forms only once. However, one important thing to remember while paying taxes jointly is that both you and your partner are accountable for each and every penny in either’s records.
A few downsides always remain, such as paying a “marriage penalty” in case you are unfortunate enough to be pushed into a higher tax bracket after marriage. This could end up in you paying higher taxes for the year you got married in, even for the months you were single. There are ways to circumvent these situations as well. In such cases, the “married filing separately” status might come in handy, using which you and your spouse will be paying lesser. The pros, however, are still numerous; you can do some good planning for your own estate after marriage. This is thanks to the fact that spouses can gift each other unlimitedly, and also that your estate stays secure between you and your spouse.
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