How Does Marriage Change Your Tax Return?

If the sound of weddings bells are in your immediate future, you probably have a million things on your mind. From picking out the right dress, to choosing the best venue to figuring out how you’re going to pay for it all, you have your hands full. But once you’ve said your ‘I do’s’, there are some other things you’ll want to look at— namely your first joint tax return together.

The first decision to make is whether you’re going to file jointly or separately. Filing single or head of household is no longer an option. For lower-income couples, filing jointly is usually the best option, since with ‘Married Filing Separately’ you are no longer eligible for valuable tax credits such as the Earned Income Credit or the American Opportunity Credit for education expenses. On the other hand, you may want to file separately if your spouse has a business, owes back taxes or child support.

If you decide to file jointly, the process is fairly straightforward. You just combine your assets together and use the ‘Married Filing Jointly’ columns instead of the ‘Single’ column when calculating your tax credits.

Things become a little more complicated when your new spouse makes significantly more than you do. Many of the credits you’re used to getting have income phase-outs built into them, meaning the greater your income, the less credit you get. Under certain circumstances, you might even end up owing for the first time in your life.

Marriage isn’t just about two people becoming one happy couple. Saying your ‘I do’s’ means your incomes, assets and liabilities are also tying the knot.

For more information consult your tax professional, or visit the IRS website for additional tax tips.