Marriage not only comes with a life partner, but also with some tax benefits. TO A married couple filing a joint tax return will often find that their taxes owed are lower than their unmarried colleagues.
There are certainly exceptions to the rule, but most average-income earners will see some benefits from being married filing jointly.
These benefits also extend to retirement plans because they offer various benefits or opportunities for married couples to take advantage of retirement savings. Below are some unique tax benefits that married couples can enjoy.
Individual retirement accounts, or IRAs, help you make retirement contributions. One of the eligibility requirements to make a contribution to a IRA is that you must have taxable income. However, there is an exception to this rule for married couples filing joint returns with a spouse who has taxable income.
Under this law, the spouse who has taxable compensation can contribute to a Spouse’s IRA with no taxable income. This is known as to spousal IRA whereby the non-working spouse funds their IRA using their partner’s income.
Marriage Tax Rates
There are different tax rates for individuals and married couples filing jointly. For example, a single person who earns $fifty,000 per year in 2022 ends in the 22 tax rate percentage. However, if this person marries someone who earns $30,000 each year, your total income is $80,000, but their joint income will peak at the 12 percentage rate as long as they jointly file their tax returns. In effect, together you can earn more money while paying a lower tax rate.
Higher income limits for tax deductions and Credits
The IRS typically rewards all taxpayers with an automatic deduction on their taxable income. This is known as the standard deduction. To present 2022 taxes, a single taxpayer will enjoy a standard deduction of $12,950 while a married couple filing jointly would get twice this amount at $25,900.
Additionally, there are many opportunities for couples to file a joint return to itemize deductions and go beyond the standard deduction. This becomes increasingly valuable when a couple buys a home and pays off the interest on the mortgage, has children that require daycare, or has older children preparing for college.
Couples who file joint returns mostly receive higher income thresholds for certain tax credits and deductions, and this means they can often earn a higher amount of income and still potentially qualify for certain tax breaks.
Tax benefits for Child
Many people in marriages are blessed with children. While raising children can be expensive, the IRS has some tax benefits available when raising dependents that help with these financial costs. For tax year 2022, the Child Tax Credit is worth up to $2,000 for each qualifying dependent under age 17. This credit is partially refundable up to $1,500, which means you could lower your tax bill dollar for dollar or get a tax refund.
There is also the Credit for Child and Dependent Care, a credit that is used to pay the expenses for the care of a child or dependent that allow them to work or look for work. The credit is up to $1,050 (35% of $3,000) for one child under age 13 (no age limit if disabled) and up to $2,100 (35% of $6,000) for two or more children under age 13 (no age limit). age if disabled).
Sure, having kids and getting married costs a lot more than these tax breaks, but when it comes to paying taxes, you still want to get all the tax deductions and credits you’re entitled to.
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