There are plenty of reasons to be glad you’re married, but the arrival of springtime tax season brings you and your spouse a whole new bouquet of benefits. Here’s a quick overview of the most helpful tax deductions you enjoy when you’re a part of a married couple.
The Standard Deduction
The standard deduction is the part of your wages you don’t have to pay any tax on. For a single person, the standard deduction for your 2015 return is $6,300. This doubles to $12,600 when you’re married. Couples who have one person earning all of the income will notice the most improvement from the standard deduction when they get married. (If you are paying a mortgage, you may want to itemize your deductions, because your mortgage interest and charitable contributions may add up to even more than the amount of the standard deduction.)
The Home Sale Tax Exclusion
If you have lived in your home for at least two of the last five years, you can sell it and avoid income tax on a portion of the proceeds. Single people don’t have to pay taxes on $250,000 of the money they receive from a qualifying home sale. However, if you’re married, you don’t have to pay any income tax on $500,000 of the sale proceeds. Not only that, but if you take the money and reinvest it in your next home, you’ll qualify all over again in the future when you put that house up for sale.
You Can Shelter Each Other
If you’ve had a rough year with business losses or high medical bills, your marriage can offer you a small silver lining. One spouse with high earnings can substantially lower their tax obligation by deducting the medical expenses or business losses of the other spouse on your joint income tax return.
You Can Both Save for Retirement on One Income
Another way that married couples can save at tax time is by each making contributions to your own individual retirement account (IRA). Even if only one of you is currently working, you are both allowed to put money into your IRAs and defer paying any income tax on it. This may bring the working spouse’s income down into a lower tax bracket while strengthening your future financial health.
If you’re newly married, it’s a good idea to talk with a tax advisor or run some experimental scenarios through your tax preparation software before filing your joint return. Getting married changes your tax status in more ways than listed here, but in general, married couples find they enjoy new financial benefits at tax time.