For better or for worse, your tax situation changes when you get married. We’ve put together a list of important topics to think about for those tying the knot this year.
Filing status
As a married taxpayer, the only filing statuses that can be used on a tax return are married filing jointly (MFJ) or married filing separately (MFS). Married taxpayers can not file as single.
Filing status is determined on December 31 of each year, so even if a taxpayer has not been not married for most of the tax year and then get married on December 31, the taxpayers will file their tax return as married filing jointly or married filing separately.
Retirement Savings
A spouse may contribute to an individual retirement account (IRA) even if he or she doesn’t work. For 2018, each spouse can contribute up to $5,500 (if under 55 years old and subject to a maximum income limit). Married couples can contribute a maximum of $11,000 into their IRAs and get an $11,000 deduction on their tax return.
Selling a primary residence
If a taxpayer sells his or her primary residence after getting married, the amount of gain that can be excluded from income doubles from $250,000 to $500,000. Be cautious, though: if only one spouse owned the home before the marriage, the $500,000 exclusion applies only if both spouses lived in the home as their main home for at least two out of the last five years.
The Standard Deduction
Taxpayers filing as married filing jointly in 2018 will have an increased standard deduction of $24,000, up from the $13,000 it would have been under previous law.
Only ONE return to file
Married taxpayers file one joint tax return each year instead of each filing their own tax return. This saves time and money.