Here are some tax benefits and things you should know before getting married
Marriage is trending down in the United States. Studies show that since 1990, marriage rates are down almost 20%. The most common reason is that it seems expensive and impractical to get married and have children. But did you know there are tax benefits for getting married?
Maybe you’re considering tying the knot with your significant other. In addition to the love and commitment you’ll be sharing, getting married also provides couples with tax benefits.
1. Filing Taxes Jointly
When you’re married, you have the option to file taxes jointly with your spouse. This can often result in a lower tax bill, as joint filers may be able to take advantage of certain tax credits and deductions that aren’t available to single filers.
For 2023, you can claim the Earned Income Tax Credit which benefits low or moderate income earners. If you also have children there are other tax credits you can qualify for if you’re under the income threshold.
The standard deduction for 2023 is $27,700, which is up from last year. This increase is due to the government adjusting for inflation.
2. Spousal IRA Contributions
If your spouse doesn’t have earned income, they can still contribute to an IRA. However, you need sufficient earned income to cover the contribution. This can be a great way to save for retirement and take advantage of tax-deferred growth.
The IRA limit is higher for 2023, increasing by $500. This is a great way to put your tax-free income towards retirement.
Hot Tip: 1 in 4 Americans do not save for retirement. Make sure you are investing to see maximum returns! It’s always better late than never.
3. Health Insurance Benefits
If your spouse has employer-provided health insurance, you may be able to join their plan and save money on premiums. Additionally, you may be able to claim a tax credit for the cost of your spouse’s insurance if you don’t have access to affordable coverage through your own employer.
This is a big plus for many Americans as both partners may not have access to affordable health insurance — and it’s required by law to have health insurance or face a tax penalty.
4. Estate Tax Benefits
When you’re married, you can pass on an unlimited amount of assets to your spouse without incurring any estate taxes. This can be a valuable way to save on taxes and ensure that your loved ones are financially protected.
While getting married can bring many tax benefits, it’s important to carefully consider your personal financial situation before taking the plunge. It’s a good idea to consult with a financial professional or tax advisor to understand how marriage will affect your taxes.