Taxes and Marriage

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While the number of married people in the United States dipped in recent years, they still pay a substantially large share of federal income taxes. Making up approximately one-half of our population, they pay 74 percent of our total taxes.

The IRS rules and filing status for married couples are different than for single people. Married couples also use different tax brackets. Marriage can also impact decisions concerning itemization of deductions, the receipt of gifts, and your home sale exclusion.

The issues married people face when filing taxes

Married couples must either file jointly, or identify themselves as married but filing separately. You must choose which status to file on if the marriage took place by the last day of the tax year. It doesn’t matter if you were single for the majority of that year.

The standard deduction for married while filing jointly is $24,000. Likewise, if marrying and filing separately, you can take a standard deduction of $12,000. What is the best choice will usually depend upon your individual circumstances.

While it is generally beneficial to file jointly, it may make sense to file separately if one spouse has significant medical expenses. This is because thresholds for such deductions differ if you are filing jointly versus separately. (It’s important to note that thresholds may vary from year to year. Therefore, the decision whether to file jointly or separately may not be the same every year.)

Benefits of filing jointly

For Michigan couples, a tremendous advantage of filing jointly is that you will be combining the deductions you take. This sometimes means itemization of deductions for those filing jointly makes greater sense than when filing separately. It especially makes sense for married couples who are purchasing their first home. Also, the home sale exclusion also doubles for married couples.

Married couples can also give bigger gifts to other individuals without necessarily triggering as significant of a taxable event for those receiving the gifts. The annual gift exclusion for those filing separately is $15,000. For married couples filing jointly, it is $30,000.

There are almost always significant tax complexities when it comes to filing returns. There are a large number of deductions and write-offs that taxpayers do not take advantage of because they do not understand all of the laws. The tax planning services of experienced tax attorneys can for this reason be invaluable.

Managing Partner of Silver Tax Group, author of the book “Stop the IRS”. Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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