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Getting engaged? Enjoy the tax benefits of marriage

And you thought it was all about love

Published: February 12, 2015 12:00 PM

Expecting to pop the question—or answer the question—this Valentine's Day? The tax benefits of marriage are most likely are the furthest thing from your mind.

But personal finances loom large in married couples' lives. And here's the good news: Married couples get some nice perks in the tax arena. So to add to all the marital blessings that await you, here are a few tax benefits to savor:

  • Your spouse could be a tax shelter. Couples whose incomes are widely different benefit when they get married and file jointly. For instance, a bride with taxable income of $90,000 a year would pay $18,383 in federal tax on her 2014 return, while her fiancée, with taxable income of $25,000 a year would pay $3,300. Filing jointly, they'd pay $20,426.50, a savings of $1,256.50. "The two incomes are netted together, so you're in a lower bracket," explains Gregg Wind, a partner at Wind and Stern, a CPA firm in Los Angeles.

Learn how to qualify for financial help if you're married but have to file separately. And check our tax guide for tips on preparing your tax return and saving money on your taxes. 

Where couples suffer from a "marriage penalty" is when both spouses have income that is just about the same. In that case, they may want to file separately. "Newlyweds should try it both ways to see what works best," says Mary Kay Foss, a CPA with Sweeney Kovar, accountants and advisers in Danville, Calif.

  • You could begin to itemize. If you haven't been able to take deductions on your tax return before, marrying someone who does—say, because of a home mortgage or small business—makes you eligible to itemize, too. Charitable contributions, state income tax, unreimbursed employee expenses—all can potentially be deducted.  
  • You can establish an IRA even if you don't work. If you're not working—say, you're a student or an at-home parent—the IRS says you can't establish an IRA. But getting hitched allows you to open an IRA as a non-working spouse. 
  • You can pass on more, tax-free. If you and your intended are so lucky has to have hefty savings and investments, you could benefit from the "portability" of the lifetime gift tax exclusion, which is $5.43 million in 2015. In short, individuals are allowed to give away up to $5.43 million, tax-free, while alive or upon their death. But a relatively new tax rule lets your spouse inherit the remaining, unused portion of your exclusion, which could lead to big estate-tax savings for your heirs. Read more on this in "Step 3" of our article, "How to create a bulletproof estate plan."
  • You can save on tax preparation expenses. Filing jointly, you'll pay a preparer for just one return, Wind notes. "It can take less time and be less expensive," he notes.

But getting married has tax pitfalls as well. For instance, filing jointly leaves you on the hook financially if your spouse turns out to owe. In extreme cases, spouses who claim they knew nothing about a partner's financial can file for "innocent spouse relief" with the IRS.

But let's hope it doesn't come to that. Before you walk down the aisle, have some frank conversations with your spouse-to-be. One study showed that married couples' early arguments about money were a top predictor of divorce. Get on the same page about taxes and other money topics now to ensure a happy, long marriage together. 

—Tobie Stanger (@TobieStanger on Twitter)


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