Marriages are quite pleasant times in life but they still have some major financial implications involved for individuals. It is worth noticing their impact on the taxation. This marriage calculator helps you find out what financial impact marriage can have on your federal income tax according to the tax rules. It takes tax brackets of 2017 into account and the rules and data that are specific to United States. When it comes to taxes, whether or not a person can be classified in the married category depends on tax year's last day. This means if a person gets married even on tax year's last day, they'll have married status for that entire year. The same rule applies for divorces as well.
Marriages are quite pleasant times in life but they still have some major financial implications involved for individuals. It is worth noticing their impact on the taxation. This marriage calculator helps you find out what financial impact marriage can have on your federal income tax according to the tax rules. It takes tax brackets of 2017 into account and the rules and data that are specific to United States. When it comes to taxes, whether or not a person can be classified in the married category depends on tax year's last day. This means if a person gets married even on tax year's last day, they'll have married status for that entire year. The same rule applies for divorces as well.
Marriage Related Tax Implications
The tax laws usually get more complicated once you get married. However, marriages give you a few opportunities for saving money additionally. In many conditions, however, the opposite happens and the married couples end up paying more taxes than what they'd have paid if they were single. In United States, this concept is known as marriage penalty. There can be a major amount to be paid in such penalties if individuals getting married have really high incomes. The reason is that when you file jointly, it leads you to fall in greater tax bracket as compared to when two individuals file their equivalent income separately.
Furthermore, if a couple has low joint income, it doesn't necessarily protect them against marriage penalties. As there are additional restrictions on their combined earnings, the couple can possibly be disqualified from getting tax credits that they'd have received otherwise.
Some other conditions also exist in which marriages lead to tax penalties as well. These situations often change, however. And, while there may be short-term penalties due to marriage, there can be many potential tax benefits in the long run. Remember, however, that exceptions do exist and there can be multiple factors involved in the process. For instance, married couples having single income usually benefit if they file jointly while couples having dual incomes may have to suffer certain marriage penalties. It is advisable to use a marriage calculator to find out how much you'll be paying under what conditions.
First of all, the marriage calculator requires you to enter specific information related to the husband as well as the wife separately. This includes their salary and business income, interests and dividends income, any royalty, rental or other passive income, short term and long term capital gains, qualified dividends, IRA, 401k and any other savings, filing status before marriage, and the number of dependents. After that you have to specify whether you want to use the standard deductions or not. If you choose the standard option, it means that interest on student loan would be $2500 at most, expenses for child care would be $3000 at most and the education tuition would be $4000 maximum. Standard values apply for mortgage interest and charitable donations as well. However, if you opt for using the custom deductions, you can specify the total for both the husband and the wife or even either of them as well. The marriage calculator also requires you to enter the city and state tax rates as well for both the spouses. Finally, select whether each of the two individuals is self-employed or not.
Finally, hit the calculate button and the marriage calculator will give you a tabular representation all the taxes that couple has to pay and specifies what their final take-home income would be. The information displayed is shown separately for each individual, and then there is a column for their combined values as well both in case if the couple is not married. The last column in the table represents all the values in case if the couple was married. The values displayed include income, federal income tax, marginal tax rate, social security tax, medicare tax, state and city income tax, IRA, 401k, etc. and the final take home income.
So, this marriage calculator really gives you great insights into the income and taxes of the couple both before and after marriage. It can really prove to be helpful in planning financial aspects of marriages.