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Are there any tax benefits to being married over being single?

Marriage can have major consequences for you and your partner’s tax situation and could save you both money in the long term.

Marriage can have major consequences for you and your partner's tax situation and could save you both money in the long term.

It may not cross your mind when upcoming nuptials are being planned, but marriage can have some significant consequences for you and your partner after tying the knot.

It can affect how you both file taxes, how your income levels are calculated, which taxes you are liable for, and how much you will both have to pay. Although not always the case, you can enjoy certain financial benefits as a result of a marriage if you decide to file your tax returns jointly.

Here’s four key tax benefits for married couples…

Marriage can reduce your capital gains tax liability

Married couples are able to transfer assets between themselves without any tax implications, meaning that it is easy to shift who has the tax liability for the asset. This is particularly useful when trying to limit the amount of capital gains tax you are required to pay.

For example, if one spouse is a lower rate taxpayer then they could avoid paying the elevated tax rate by shifting financial assets to the person who is taxed less. This could be anything from company shares to a rental property and can prevent them being taxed at the higher rate.

Easier filing

An underappreciated aspect of the tax-filing process is, simply, how time-consuming and costly it can be. Sen. Elizabeth Warren has been pushing for reform to the tax filing system which currently sees the average filing spend 13 hours and $200 to complete.

Married couples can file a joint tax return, preventing the unnecessary waste of time and money.

No estate tax for inheritance

One of the key financial benefits of marriage is the avoidance of estate tax, the tax normally levied on the inheritance passed down after death. Although any assets passed on to a decedent will be subject to this tax, married couples can leave an unlimited amount of money to their spouse without accruing estate tax.

Tax will only be levied once both members of the couple have died.

Marriage opens up eligibility for IRA contributions

Normally out-of-work individual filers cannot contribute to an Individual Retirement Account (IRA), one of the tools most widely used to save for retirement. However if you are married and your spouse is working you can still contribute to an IRA using a joint income. Eligible married couples can either make IRA contributions into two separate IRAs or into a single combined IRA.


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