Does Getting Married Affect Your Taxes?
Understanding Marriage Penalties and Bonuses in 2024
Tying the knot is a joyful occasion, but for some couples, the excitement can be mingled with concerns about how their new marital status will affect their taxes. Fortunately, the landscape of marriage and taxes has changed significantly in recent years. While the dreaded “marriage penalty” once plagued many couples, the Tax Cuts and Jobs Act of 2017 has brought relief for most filers. However, understanding the nuances of your specific situation is crucial for navigating the tax implications of marriage in 2024.
Filing Jointly: Advantages and Potential Liabilities
Although filing jointly often offers tax benefits, it’s crucial to be aware of potential downsides. Joint filers are held “jointly and severally liable” for any tax errors or underpayments, meaning the IRS can come after either spouse for the full amount even after divorce. If you have concerns about your partner’s financial practices, consider filing separately to shield yourself from this joint liability.
Understanding the Marriage Penalty vs. Marriage Bonus
The “marriage penalty” used to refer to higher combined taxes for married couples compared to their single status. While this is still possible for very high earners, the TCJA has eliminated it for most couples by doubling the tax brackets for joint filers. If one spouse has significantly lower income, you might even experience a “marriage bonus” thanks to lower combined tax rates.
Marriage Penalty Example
- Jack and Jill: Both with equal high incomes, their combined income might push them into a higher tax bracket, creating a marriage penalty.
Marriage Bonus Example
- Riley and Ben: Riley earns the majority of the income, and their combined filing could place them in a lower tax bracket compared to Riley filing alone, resulting in a bonus.
Considerations at Lower Income Levels
Generally, if your combined taxable income is below $609,350, your marital status won’t significantly impact your taxes in 2024.
Other Tax Considerations
- Tax Breaks: Marriage affects eligibility for certain tax breaks like the child tax credit and principal residence gain exclusion.
- Timing: While love shouldn’t be dictated by tax implications, understanding the benefits and drawbacks of marrying in 2024 compared to 2025 might be relevant for some engaged couples.
Seek Professional Guidance
Consulting a Brady Ware tax advisor can help you analyze your specific situation and determine the optimal filing strategy based on your income, deductions, and credits. This personalized approach can ensure you make informed decisions that maximize your tax benefits and avoid potential downsides.
Remember: While tax considerations might not be the primary factor in your decision to get married, understanding the implications can ensure a smoother financial transition into your new life together. By utilizing the information provided here and seeking professional guidance if needed, you can navigate the tax landscape confidently and optimize your financial well-being as a married couple.
Questions?
Cody has been guiding closely held businesses across diverse industries since joining the firm in 2016. His expertise spans individual and corporate taxation, long-term business planning, and seamless succession and exit strategies.