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The decision to get married is more about romance than finances for most people. However, it should be noted that money is an integral part of what creates a compatible couple. For anyone getting married, it would be foolish to ignore the financial consequences of marriage – specifically, the tax implications. Smart couples face a number of key tax decisions that can save or cost them thousands of extra dollars per year in taxes. Today, Metro Accounting And Tax Services, CPAwill review the very important implications of getting married.
What are the major differences between married and unmarried couples?
When it comes to legal rights and being married vs. unmarried, there are several major issues to consider. Specifically, unmarried couples do not:
Have the right to speak for each other in a medical crisis. If your life partner loses consciousness or capacity, someone will have to make the decision whether to go ahead with a medical procedure. That person should be you. But unless you have taken care of some legal paperwork, you may not have the right to do so.
What estate and financial planning steps are particularly important for unmarried couples?
The following steps are particularly important for couples who are not married:
Do married couples need life insurance?
The purpose of life insurance is to provide a source of income for your children, dependents, or whoever you choose as a beneficiary, in case of your death. Therefore, married couples typically need more life insurance than their single counterparts. If you have a spouse, child, parent, or some other individual who depends on your income, then you probably need life insurance. Here are some typical families that need life insurance:
If one spouse changes their name after marriage, who should be notified?
You should notify all organizations with which you previously corresponded with your maiden name. The following is good list to start with:
Do I need to update my will when I get married?
Absolutely. Your will should be updated often, especially when such a significant life event occurs. Otherwise you spouse and other intended beneficiaries may not get what you intended upon your death.
What are the tax implications of marriage?
Once you are married you are entitled to file a joint income tax return. While this simplifies the filing process, you may find your tax bill either higher or lower than if each of you had remained single. Where it’s higher it’s because when you file jointly more of your income is taxed in the higher tax brackets. This is frequently referred to as the “marriage tax penalty.” Tax law changes in the form of marriage penalty relief were made permanent by the American Taxpayer Relief Act of 2012, but don’t eliminate the penalty for taxpayers in the higher brackets.
You cannot avoid the marriage penalty by filing separate returns after you’re married. In fact filing as “married filing separately” can actually increase your taxes. Consult Metro Accounting And Tax Services, CPA if you have any questions about the best filing status for your situation.
Note: Under a joint IRS and U.S. Department of the Treasury ruling issued in 2013, same-sex couples, legally married in jurisdictions that recognize their marriages, are treated as married for federal tax purposes, including income and gift and estate taxes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or not.
In addition, the ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country is covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
How can married couples hold property?
There are several ways of owning property after marriage, but keep in mind that they may vary from state to state. Here are the most common:
For these and other pertinent life changing events, let the Financial Advisors at Metro Accounting And Tax Services, CPA be your trusted financial partner. Call the office at 470-240-5143.
User | 23/11/2017