Marriage tax benefits and changes: How does getting hitched affect taxes?

Marriage can affect taxes in many ways. While everyone’s tax situation is different, there are some benefits of marriage that may help you pay less in taxes than you’d pay as a single filer. Plus, you’ll have tax options as married taxpayers that single filers don’t. Other tax changes after marriage are related to paperwork you should complete. 

When you’re tying the knot, you have a lot to consider where finances are concerned. For your taxes, you’re probably wondering what happy news there might be to go along with your nuptials. 

Gift tax and estate planning 

Spouses can give unlimited gifts of cash or other property to one another free of gift taxes. This has important implications for estate planning purposes, so be sure to revisit your estate plan once you get married. 

IRA beneficiary options 

Rules for inheriting an IRA can get complicated and can sometimes mean paying taxes when you’re named as someone’s beneficiary. However, spouses have a special rule which may ultimately mean you can defer the distributions longer and if you are in a lower income tax bracket at the time of distribution, paying less tax on the distribution. When you name your spouse as the beneficiary of your IRA, your spouse can treat the inherited IRA as their own.

If it’s a Traditional IRA, your spouse may be able to put off taking distributions longer than a non-spouse beneficiary. If it’s a Roth IRA, your spouse won’t need to make RMDs during their lifetime.

Name change with Social Security 

Because your return is filed under your Social Security number, it is important to ensure the Social Security Administration has been notified of any name changes that take place. The SSA must process the change in the system and relay that information to the Internal Revenue Service before you file your return. You should wait to file your return until after the name change process has been completed to avoid any complications that could arise if the name on the return does not match the SSN on file with the SSA. 

It may be wise to change your Form W-4 with your employer to reflect a change in marital status, as your form entries will be different from previous years. This is especially important for determining the appropriate amount to be withheld by your employer after a change in marital status. 

Once you get married, the only tax filing statuses that can be used on your tax return are married filing jointly or married filing separately.

Your filing status is determined on December 31 of each year, so even if you were not married for most of the tax year, you don’t have the option of filing as single if you are married before the end of the year. Generally, married filing jointly provides the most beneficial tax outcome for most couples because some deductions and credits are reduced or not available to married couples filing separate returns. 

Tax bracket 

The tax brackets will determine the highest rate of tax imposed on your income. Tax brackets are different for each filing status, so your income may no longer be taxed at the same rate as when you were single. 

When you are married and file a joint return, your income is combined — which, in turn, may bump one or both of you into a higher tax bracket. Or, if one of you is a higher earner, that spouse may find themselves in a lower tax bracket. Depending on your situation, this could be a tax benefit of being married. 

Marriage tax penalty 

A marriage tax penalty exists when two individuals filing a joint return pay more tax than the sum of their individual tax liabilities calculated as if they were filing as single taxpayers. One reason this occurs is because the MFJ income tax brackets and standard deduction are not always equal to twice the single income tax bracket and standard deduction.

Under current law, the marriage penalty is partly alleviated because the lower income tax brackets (10%, 12%, 22%, 24%, and 32%) and the standard deduction for MFJ are exactly double that of single individuals. 

—H&R Block