The decision to spend the rest of your life with someone you love is important. After walking down the isle and saying “I do” to your future spouse, there are many great things that could happen in your marriage together. One of those positive things might be some tax benefits. There are several generous tax advantages that married couples receive.
A married couple will start to see cost savings as soon as they file their taxes together for the first time. That obvious advantage is that filing one joint tax return together will usually result in lower accounting fees than by filing two separate tax returns. But there are also other financial benefits for couples that file together. For example, if you make a significantly higher income than your spouse, filing together could potentially lower your tax rate. In addition, newly married couples can receive open enrollment into a health care plan on the public marketplace, which could mean more tax breaks.
One of the best tax benefits about being married are the new deductions. For example, if your spouse loses money from a business, you can now write off those losses when you file together. Couples that file together can also make write off more charitable deductions. But the biggest tax deduction for married couples might be the standard deduction. In 2016, the standard deduction for single people was $6,300. For married couples, it $12,600 — which is twice as much. And if you decided to have children, you could receive more tax breaks.
Perhaps the biggest tax benefit for a married couple is with retirement money. Even if your spouse is unemployed, they can still open an IRA. So, you can max out your IRA and their IRA in the same year. Another tax benefit for married couples is with right of survivorship. That means in case you die, your spouse will receive all of your assets without having to pay the estate tax. This tax savings could be a tremendous help for your spouse. In addition, there are no caps on gifts between spouses. That means that a couple could give each other unlimited gifts without having to report it on taxes. Finally, there is a major capital gains tax advantage for married couples in which they are allowed to profit up to $500,000 for the sale of a home. Single people can only profit up to $250,000.
William Doonan is a tax law and legal expert in Bronx, NY.