When you tie the knot, your financial lives will change. Marriage can affect your money and tax situation, so here are some things to consider:
You can now elect to file jointly. Joint filers may deduct two exemption amounts from their income, which amounts to one of the biggest standard deductions in the federal tax code. For 2014, a single filer can take a standard deduction of $6,200, but a married couple filing jointly can take one of $12,400.
Joint filers are eligible for tax breaks at comparatively higher income thresholds than single filers, and filing jointly opens the door to eligibility for the American Opportunity and Lifetime Learning Credits, the Child and Dependent Care Credit, the adoption credit and the Earned Income Tax Credit.
So why would any married couple file separately? In most cases, filing separately invites higher taxes for a married couple. When couples forego joint filing, they become ineligible tuition and fees and student loan deductions and those mentioned above. Deduction for traditional IRA contributions shrinks if you reject joint filing status.
In rare circumstances, filing separately may offer particular tax advantages.Run the numbers to see which filing status gives you the lowest taxes.
Your household budget will likely need adjusting. List your combined monthly income sources and your essential and discretionary expenses each month. Aim to save some money per month for your emergency fund, even just a little.
Set aside time for a conversation. A conversation about how you each see money will be informative. Beyond the budget, pursuing long-term money goals with a shared investment outlook is important. Life insurance and a will also go on your to-do list. Turn to a financial professional for input, if you wish.
Source: Pete Meehan, Financial Decisions Group, 233-8476 or email@example.com
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - taxfoundation.org/article/2014-tax-brackets [11/27/13]
3 - tinyurl.com/k3omgyk [2/19/14]