How Does Marriage Impact Your Finances? Tax Benefits And More

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:

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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.

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