Question

besides the fact that a married couple doubles the amount of annual exclusion by girf splitting, what other tax-reducing benefit do couples receive?

Answer 1

1. Your spouse may be a tax shelter

While O’Brien doesn’t advise anyone to seek out a partner specifically because he or she has a business that’s losing money, it's worth noting that the negative numbers of one person in a marriage can help both spouses. The spouse, whose losing cash may not exploit a few reasoning’s, incorporating those managing the house, however the companion who's creation cash may utilize the misfortune as a tax benefit. “This is also true of high medical expenses,” O’Brien said.

2. Jobless spouse can have an IRA

A spouse may contribute to an individual retirement account (IRA) even if he or she doesn’t work. Additionally, said Antonioli, the point at which the IRA benefits are phased out based on income are dramatically higher for married couples than they are for single people.

"A taxpayer who couldn’t pay into an IRA when single can use the joint income to fund one and potentially put away thousands of dollars for retirement while receiving substantial tax benefits," O’Brien said.

3. Couples may "benefit-shop"

If both spouses have benefit packages from their jobs, they can pick the most valuable benefits from the two plans, Antonioli said. The right mixture of benefits from two plans can increase a couple’s tax savings in other ways. Fay mentioned child care as an example. “If they have dependent children, they can benefit from using benefit plans such as dependent care plans,” Fay said in an email. “It is frequently the case that one of them may not have such a plan, but the other one does.”

4. A married couple can get greater charitable contribution deductions

There’s a limit to the charitable contributions that may be deducted in a year, based on income. Having a spouse can raise that limit, Fay said. “If one of them makes very large charitable contributions but doesn't have income of at least double that amount, the excess contributions are carried over to the following year,” she noted. “In a jointly filed return, they can add the spouse's income in determining the currently deductible amount. So they save current taxes.”

5. Marriage can protect the estate

Being married can help a wealthy person protect the assets he leaves behind when he dies. Under federal tax laws, you can leave any amount of money to a spouse without generating estate tax, so this exemption protects the deceased’s estate until the spouse dies.

6. Filing can take less time and expense

This one is simple: If the spouses have to file just one tax return, there’s a good chance that it will take less time to assemble the paperwork—at least for the one not doing the taxes—and cost less to have it prepared.

7. Tax downsides to marriage

There are tax benefits to nuptials, but some drawbacks exist as well. They don’t mean you shouldn’t get hitched; just consider them unwelcome gifts, along with that third toaster oven and the cheap fondue set.

First, once you sign the joint return, you are fully responsible for every number that’s in it. If your spouse fudges a figure, you’re equally liable for the consequences. The University of Denver’s Kevin O’Brien noted that you aren’t responsible for your spouse’s mistakes or deliberate omissions if they happened in the years before you married or if you can prove that you didn’t know about them.

Also, it might be harder to reach the higher minimum percentages of income necessary to be able to deduct medical expenses, given the combined income, unless one or both of you had significant expenses. And finally, if there’s a garnishment for an unpaid loan or child support against a spouse, a refund could be delayed or blocked, O'Brien said.