How Does Marriage Impact Your Finances? Tax Benefits And More

Although it’s only January, our friends with spring and summer weddings are already in full planning mode. With a big royal wedding on the horizon for late April and tons of speculation about Natalie Portman’s upcoming nuptials, we turn our attention to one of the biggest decisions any of us will ever face: Marriage.

Whether or not you eventually choose to take vows, deciding whether—and to whom—to get married will affect nearly every other decision you make. Financial impact aside, everything will change when you start deciding on life choices as a couple.

Taking On A Partner’s Finances, ’Til Death Do Us Part.

In some cases, a spouse’s income is a welcome cash surge, but in other cases, getting married means supporting someone who makes less than you do or helping to bear the burden of his debt. We’re not saying you shouldn’t take the plunge; just make sure you have an honest conversation about your financial pasts before making irrevocable decisions about how you’ll manage your joint money.

How Marriage Can Spell Tax Benefits And Penalties.

Although most people won’t see a big tax difference from getting married, the best benefits go to couples in which one partner makes significantly more than the other. The disadvantages tend to go to couples in which both people make relatively large salaries. We ran some numbers to see how the breakdown of a couple’s income can affect tax rates:

The IRS Actually Cares Whether You Have A Spring Or Winter Wedding.

At least, the IRS cares whether you get married on December 30th or January 2nd. As long as you’re married by December 31st of a given year, the government considers you as being married for the full tax year.

Other Tax Breaks You Could Get If You Were Married.

Whether or not you’re married, you’d get a tax break when you sell your home—but married couples get twice the tax break. Married couples also don’t have limits on how large an estate they can leave to a spouse, and potential taxes on that estate are deferred, giving the surviving spouse time to make other tax adjustments to ease the tax burden on the way that those assets are distributed. There are even benefits for widows or widowers, which couples wouldn’t receive if they weren’t married.

What Marriage Means—Legally.

Vows of love may mean different things to different people, but the legal ramifications are the same regardless. These include the right to inherit property if one partner doesn’t have a will, to make hospital visits and medical choices when one partner is too ill to make decisions, joint insurance policies, annuities, pension plans, Social Security, divorce protections, property tax perks if one spouse were to pass away, the ability to file joint bankruptcy, domestic violence intervention, and more.

  • Katie

    The biggest impact we had after getting married is that although individually we were each eligible for a Roth IRA, as a married couple (who make about the same amount as each other) we were no longer eligible! Granted we’ve were able to work around it by starting it as a traditional IRA and then rolling it into a Roth, but it won’t be available every year.

    • http://twitter.com/amkade Allison Kade

      Hi Katie,nnThat does stink, but good for you for being on top of it! On the upside, at least you have the Roth IRA now, which will continue to grow even if you later have to contribute to a traditional IRA instead.nnBest of luck!nnAllison

  • Lilian

    If you are married, can you still file your taxes separately?

    • Keli

      Yes, though there aren’t many times where that is beneficial. Look at the chart and see what your income is and your spouse’s income. Multiply the percent by the income it applies to (yours, your spouse’s, joint income) and see whether that number is bigger for yours plus your spouse’s or for the both of you filing jointly.

    • http://twitter.com/amkade Allison Kade

      Hi Lilian,nnYou can file separately if you’re married, but there’s a reason most couples choose not to–and not least because it creates a lot more paperwork. I’d suggest doing as Keli recommends and figure out how much, if anything, you’d actually save. Then, decide whether those savings are worth the cost in time and money to do taxes twice instead of once.nnHope that helps!nnAllison

  • Kate Roth

    I would be interested in knowing if there were any tax benefits to being married and filing separately – can that help change the income tax bracket?n

    • http://twitter.com/amkade Allison Kade

      Hi Kate,nnFiling separately can sometimes help, but it’s a lot more paperwork and doesn’t usually have huge benefits. Use the tax bracket chart to figure out what your tax bracket would be if you filed on your own, and multiply the percentage by your income to see how much you’d be paying. Do the same thing for your spouse. Then, figure out how much you two make together, what percentage that would be, and how much money that comes out to. If it’s not a big difference, then filing separately may not be worth your while. nnAllison

  • Elise

    Hi Kate,nnMy husband and I (married in 2010) make about the same amount of money and the tax bracket is the same whether we file together or separate, but I paid over 10K in grad school bills in FY2010. If I/we file separately will I get more of a tax refund because of all the money that went to schooling? i.e. If we file together, will the tax refund be less? Is there a way to figure out the difference without doing our taxes completely both ways? Thanks!nnElise

    • Elise

      And I meant to address that to Allison, sorry!

      • http://twitter.com/amkade Allison Kade

        Hi Elise,nnWhen it comes to individual tax questions, we love this calculator, which you can use for tax projections and to compare two different scenarios: http://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1nnFor a more personalized response, email feedback@learnvest.com for VIP access to speak with a Certified Financial Planner through the LV Live Premium service. Hope that helps!nnBest of luck,nnAllison

        • Elise

          Hi Allison,

          Thanks for the feedback, that was very helpful. It turns out joint was best because if you file “Married filing separately” then apparently you can’t take education credits…eek! Thanks again!

          ~Elise

        • Elise

          Hi Allison,

          Thanks for the feedback, that was very helpful. It turns out joint was best because if you file “Married filing separately” then apparently you can’t take education credits…eek! Thanks again!

          ~Elise

        • Elise

          Hi Allison,

          Thanks for the feedback, that was very helpful. It turns out joint was best because if you file “Married filing separately” then apparently you can’t take education credits…eek! Thanks again!

          ~Elise

  • ItsComplicated

    Question for the author or anyone about taxes. This is a second marriage for me and for my husband. After 8 months we do not have any joint accounts. I moved 100 miles to be with him and left my well-paying job. I have been paying for various home improvements/bills/vacations-restaurants here (not small amounts, esp. for an unemployed person!) as well as the mortgage for my previous house (I just sold) out of my savings. He pays the current mortgage and utilities. Obviously, the main problem is not joint or separate accounts, but the lack of a global view of our financial situation, which is no longer independent, no matter how it is “managed”. He has a lot of debt and I feel is in denial about how bad the finances are; I am allergic to debt and think he just wants to avoid the whole matter. He thinks everyone has debt and he makes a good salary so in a way he is somewhat insulated from the fallout of his decisions.nBecause our finances have not been merged, it seems right to me to file as “married filing separately”. With deductions. mortgage interest, a dependent and my lower income, I will probably have a refund, and it seems fair to me to have that to put back in my bank account, as opposed to lowering my husband’s taxes. nDoes that sound right?

  • ItsComplicated

    Question for the author or anyone about taxes. This is a second marriage for me and for my husband. After 8 months we do not have any joint accounts. I moved 100 miles to be with him and left my well-paying job. I have been paying for various home improvements/bills/vacations-restaurants here (not small amounts, esp. for an unemployed person!) as well as the mortgage for my previous house (I just sold) out of my savings. He pays the current mortgage and utilities. Obviously, the main problem is not joint or separate accounts, but the lack of a global view of our financial situation, which is no longer independent, no matter how it is “managed”. He has a lot of debt and I feel is in denial about how bad the finances are; I am allergic to debt and think he just wants to avoid the whole matter. He thinks everyone has debt and he makes a good salary so in a way he is somewhat insulated from the fallout of his decisions.nBecause our finances have not been merged, it seems right to me to file as “married filing separately”. With deductions. mortgage interest, a dependent and my lower income, I will probably have a refund, and it seems fair to me to have that to put back in my bank account, as opposed to lowering my husband’s taxes. nDoes that sound right?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Flor

    I am currently in chapter 13 bankrupcy. I am also about to marry this DEC 2011. If I fille jointly with my future husband will my bankrupcy effect his credit? If we filed seperetly will it still effect his credit since I will have to list his name and social?

  • Suzie

    That’s all fine and dandy, but what if I don’t want to or cannot be legally married to someone? Why should I be subject to a broken system that does not equally support single, committed people? Why should I have to marry someone just so they can have an easier time when inheriting my property when I die or deciding to pull the plug on me if I’m braindead? Just saying.

  • Suzie

    That’s all fine and dandy, but what if I don’t want to or cannot be legally married to someone? Why should I be subject to a broken system that does not equally support single, committed people? Why should I have to marry someone just so they can have an easier time when inheriting my property when I die or deciding to pull the plug on me if I’m braindead? Just saying.

  • Suzie

    That’s all fine and dandy, but what if I don’t want to or cannot be legally married to someone? Why should I be subject to a broken system that does not equally support single, committed people? Why should I have to marry someone just so they can have an easier time when inheriting my property when I die or deciding to pull the plug on me if I’m braindead? Just saying.

  • Suzie

    That’s all fine and dandy, but what if I don’t want to or cannot be legally married to someone? Why should I be subject to a broken system that does not equally support single, committed people? Why should I have to marry someone just so they can have an easier time when inheriting my property when I die or deciding to pull the plug on me if I’m braindead? Just saying.

  • Suzie

    That’s all fine and dandy, but what if I don’t want to or cannot be legally married to someone? Why should I be subject to a broken system that does not equally support single, committed people? Why should I have to marry someone just so they can have an easier time when inheriting my property when I die or deciding to pull the plug on me if I’m braindead? Just saying.

  • Laura Stevermer

    I am not very educated when it comes to taxes and I have a question.  My husband and I separated a year ago.  We own a house together and he has his own business which is on the same property we own together.  We also have a 3 year old son together.  We filed jointly last year even though we were separated. We ended up owing money of which my husband paid because it is mainly because of the business.  But he was late with it and my boss recieved an audit to fill out on me.  I am struggling with how to file this year.  Would it be more beneficial to me to file separately or jointly?

  • blah

    I think that’s the whole problem with this system this government has made and passed on from generation to generation. Entitlements. Right now I’m viewing this gay marriage movement which I’m all for. However, what I’m also hearing in terms of taxes..”its not fair” . Join the singles club who never wants to be married ever.

  • http://nmscpas.com/ nmscpas.com

    If I make around 32k and my wife makes around 25k and just got married. Would we get more back than single? No itemize or children or dependants.