5 Tax Advantages of Marriage

Marriage

Marriage has many advantages. While God never condemns one who remains single and focused on serving Him, there are many blessings for those who decide to marry. While most of those blessings extend past the topic of personal finance, there are some financial advantages to married life. In this article, we want to explore just one angle of that: taxes.

I will state at the outset that I am not a tax expert or adviser, but I am constantly trying to learn ways where I can – legally and morally – lower my exposure to taxes. The advantages below are all simply part of the tax code (as it now stands), and can be taken for any married couple to help ease the burden come April 15. But, please check all of these with a tax professional, since the IRS tax code seemingly changes daily (and is confusing anyway).

1. Large Standard Deduction

Nearly every TV sitcom has had an episode where one spouse is trying to figure out all sorts of weird (and, of course, illegal) deductions on their taxes. What is never mentioned in those programs is that just being married is a very large deduction. In fact, the deduction is about $12,000 for a married couple filing jointly, while it is only about $6,000 for a single individual. While this deduction is huge in any married household, it is remarkably large in those homes where there is only one primary breadwinner. Since it is not income-based, this standard deduction can help a couple start their taxable income at a much smaller number.

2. No Gift Tax

Very few of us will have to deal with large estate tax codes, but many want to give away assets before they pass, and the IRS does not make that very easy. Gifts must be smaller than $13,000 annually, unless you are giving them to your spouse. If you are giving a gift to your spouse, there is no limit to the size of the gift, as far as taxes go. It may seem strange to “gift” money to a spouse, but it is a good way to move assets that may have only been in one name without having to deal with a large tax burden.

3. IRA Contributions

Married couples are able to fund “spousal IRAs” with no penalty, provided they meet certain income requirements. Interestingly, if neither spouse has an employer-based retirement plan, even the income restrictions are waived. Either way, married couples can fund their own IRA up to the maximum amount for the year, and then open another IRA in the spouse’s name and fund it up to the maximum amount, even if the spouse has little or no earned income. It is a way in which the government really does help out with retirement!

4. Capital Gains Tax on the Sale of a House

One of the most well-known tax breaks comes on the sale of a primary residence. If you owned the house and occupied it for at least two of the previous five years, it qualifies for no capital gains taxes. However, there is a limit on that, and here is where the advantage to being married comes in. If you are single, the amount of profit you can make on a house with no taxes is $250,000. If you are married, however, that is raised to $500,000, and only one spouse has to “qualify” for the two-of-five-years rules listed above. While most of us will not own a house that appreciates that much, it is still a great advantage if you live in a very good real estate market.

5. Higher Charitable Deductions

There are limits as to how much money a person can give to charity and get a major tax break, but if a couple gives to charity, those limits are raised. This should open the eyes of Christians, since we are to be givers! While we do not give solely for the tax advantage, it is a generous bonus from the government to allow married couples to take even more advantage of this.

There are many other tax advantages to being married. Why not help us build our list by sharing more in the comments? Also, if there are clarifications to any of these that you can help with, please share those in the comments, as well.

What are some other tax advantages of marriage? Let us know!













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4 Comments
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  1. Great article to help people understand more about taxes. Note under #2 for gift taxes that the annual exclusion amount for 2013 is $14,000 instead of $13,000. Also it may be nice to add the fact that the annual exclusion applies to each spouse separately. For example, a couple can give their married child up to $112,000 in a 2-day period. If you want more specifics on how this works, I actually just wrote a blog article on this a couple weeks ago titled “How To Avoid Taxes On Gifts”. In addition, you can still give beyond that $14,000 annual exclusion amount without having to pay taxes. Any amount above the annual exclusion amount goes against the lifetime maximum, which most people will never have to worry about exceeding ($5.25 million in 2013).

  2. Be aware that some tax advantages for married couples are only available if the couple is Married Filing Jointly, not married filing separately. In some cases, the tax advantage for two married individuals filing jointly is greater than if the two filed separately. You may want to check with your tax preparer to determine which filing status is right for you.

  3. Is it a better option to file jointly as a married couple rather than two individual claims? I’m not sure if the tax advantages make it a better choice or not financially speaking?

    • Once you are married, you have to file married joint or married separate. Married joint is better 98% of the time. A few times where married separate is better includes the following: 1) One spouse has IRS debt/liens 2) One spouse has less income, but very high medical expenses…

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