Marriage is an exciting life event, but it’s also one that can significantly impact your financial and tax situation. Whether you're preparing for the big day or planning your financial future, understanding the tax implications of marriage is essential. Let’s explore how tying the knot can influence your tax filing options, potential benefits, and drawbacks.

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Tax Filing Options for Married Couples

Your marital status on December 31 of a given year determines your tax filing status for that year. As a married couple, you can choose between two filing options:

1. Married Filing Jointly (MFJ): This is the most common choice, as it simplifies the process by combining both spouses’ incomes, deductions, and credits into one return.

2. Married Filing Separately (MFS): This option can be useful in certain situations, such as when one spouse has significant medical expenses or tax debts, but it often results in higher taxes and the loss of some deductions and credits.

Most couples benefit from filing jointly, but the best choice depends on your unique financial situation.

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The Downsides of Marriage on Taxes

While marriage has its romantic and practical benefits, it’s not always advantageous for your tax bill.

1. Marriage Penalty

High-earning couples may face a “marriage penalty,” where combining incomes pushes them into higher tax brackets. For example:

• The 37% top tax rate applies to joint filers with incomes over $731,200, but to single filers with incomes over $609,351.

2. Joint Liability

When you file jointly, both spouses are equally responsible for any tax debts, penalties, or errors on the return—even if the issues result from one spouse’s actions. Filing separately can shield you from this liability, but it comes at a cost.

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Tax Breaks You Could Lose

Combining your income as a married couple may reduce or eliminate eligibility for certain tax breaks, including:

• Child Tax Credit: Higher combined income may phase out this benefit.

• Education Credits: The Lifetime Learning Credit and American Opportunity Credit may no longer apply.

• Qualified Business Income (QBI) Deduction: Small business owners could lose part of this deduction if their income exceeds certain limits.

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When Marriage Can Be a Tax Benefit

Not all couples face a higher tax burden after marriage. If one spouse earns most or all of the income, filing jointly can reduce your tax liability. This is often referred to as the “marriage bonus.” By averaging out income across both spouses, joint filing can lead to lower overall tax rates for the household.

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Tips for Newlyweds

1. Evaluate Your Combined Finances: Assess how your combined income and deductions will affect your taxes.

2. Consider Professional Advice: A tax professional can help you determine whether filing jointly or separately makes the most sense.

3. Plan for Tax Season: If you’re combining finances, update your withholding with your employer to ensure the correct amount is being withheld from your paycheck.

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Final Thoughts

Marriage is a major life milestone that comes with financial implications. Whether you experience a marriage penalty or a marriage bonus depends on your unique circumstances, including your income levels, deductions, and eligibility for credits.

If you’re preparing for marriage or looking to understand its impact on your taxes, consulting a tax professional can help you make informed decisions.

Need help navigating the tax side of marriage? Contact us today for personalized advice.