Source: ezinearticles.com
When you get married, you get an option of filing your tax return under the category -married filing jointly.However there could be a marriage penalty in the sense you may end up paying higher taxes due to higher tax brackets.This is especially possible when the income of the spouses is unequal.Combining those incomes may take to higher tax brackets and consequently ending up paying higher taxes.
However, there are some benefits which can be available for married people from IRS.Let us list them here:
If you are facing higher tax brackets due to marriage, you can continue to file as a single person.However in reality the 'married filing separately' status rarely helps people.This is due to certain restrictions imposed by IRS.If all the spouses prefer to file separately, one cannot take itemized deductions while the other is taking standard deduction.Both have to claim only one choice.
Fringe benefits - marriage may open up with some new opportunities for saving.For example, if you are covered by the medical plan offered to your wife, you need not continue with your medical insurance premiums.Perhaps you can trade on for another benefit.
Benefits on withholding - you may tune Up your withholding after marriage. You need to analyze properly withholding provisions.You can also analyze the fringe benefits so that you can decide which one to continue for yourself and which one to leave to your spouse.This can substantially reduce your withholding, getting you more money for your new life.
Benefits on selling a house - when your filing status changes on marriage, you can claim more tax free capital gain on sale of your house.In fact the amount doubles from $250,000 to $500,000.Remember, there are certain conditions -you should own and live in the house for at least two out of the last five years.If both husband and wife own houses for more than two years before the marriage and they sell those houses in the year of marriage, the exclusion amount can, income tax bracket, be $500,000.
Remember, if you change your name after the marriage, you need to inform such change to the social security administration by filing form SS-5.If the name entered on your tax return is not corresponding to the name with the social security and administration, it will delay several things including your refund.If you are near to the filing deadline and you do not have time to change the details with the social security administration, then you should file joint return under your old name and then the corrected one with the social security administration for the next year's return.
There are all sorts of financial decisions you take in your life. You make gifts to your children; you make investments and acquire real estate. Do you really know the tax implications of these decisions, which can save you thousands of dollars?
Stop donating your money to IRS is an e-book on these little known tax secrets. It is written by Chintamani Abhyankar, a tax professional for last 25 years. Get the expert advice
