Marriage is a life-changing decision, and it’s essential to consider how it impacts your financial and tax situation. Depending on your circumstances, getting married could simplify your taxes—or increase your tax burden. Here are key points to keep in mind.

Marriage and Tax Filing Options

Your being married on December 31 determines your tax filing choices:

• File jointly, combining income, deductions, and credits
• File separately, using married-filing-separately status

Most couples file jointly for simplicity and financial benefits, but this may not always be the best choice.

Potential Tax Negatives of Marriage

• Marriage penalty: Couples with high combined incomes may face higher tax rates than if they were single. For instance, the 37 percent tax rate applies to income over $731,200 for joint filers but $609,351 for singles.
• Joint liability: Filing jointly means both spouses are fully responsible for tax debts, even for errors or fraud committed by the other spouse.

Filing separately avoids joint liability but often disqualifies you from valuable tax breaks and can result in higher tax rates.

Tax Breaks at Risk

Your combined income as a married couple could reduce or phase out eligibility for certain tax breaks, including:

• The child tax credit
• Education credits
• The qualified business income (QBI) deduction
• The marriage bonus

Not all couples face higher taxes after marriage. If one spouse earns most or all of the income, filing jointly can reduce your combined tax liability. For example, couples with disparate incomes often see savings from joint filing.

Key Takeaways

• Assess how marriage will affect your taxes, including eligibility for deductions and credits.
• Consider filing separately to avoid joint liability, though it may increase your tax bill.

If you want to discuss the tax implications of staying single, marrying, divorcing, or filing separately, contact us to schedule a consultation. We’re here to help you navigate your options and make informed decisions.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Red Oak CPAs assumes no liability for actions taken in reliance upon the information contained herein.