How Marriage Will Affect Your Taxes - YouTube

if you are getting married or you want to  get married one day then it's important that  

you understand how marriage will affect  your taxes now i know i know all right  

taxes are probably the last  thing that you're thinking about  

before your wedding day but listen it's a  big deal because over 55 of marriages end  

because of financial issues and it doesn't have to  be this way especially if you and your partner sit  

down and discuss finances in a healthy  way so in this video what i want to do  

is help you understand exactly how marriage  will affect your tax situation stay tuned

hey there and welcome back to our channel  i'm sean with life accounting the accounting  

company that saves people from high taxes  and low profitability listen if you find  

any value from this video whatsoever please hit  the like button to support our channel and help  

this video spread in the youtube algorithm okay  so i'm going to make this as easy as possible  

to understand because i know the tax code can  seem like a foreign language to some people

it's going to be easy okay i'm gonna walk you  through step by step with examples and by the end  

of this video you're gonna clearly understand  how marriage will affect you at tax time  

all right let's go to get started so there are  two ways to file a tax return when you are married  

okay there is married fouling jointly and  married filing separately so the first big  

question that you and your partner are going to  want to answer is are you going to foul married  

separately or married jointly but of course in  order to answer that question we first need to  

get more information to break down which option  we should choose right so let's continue to do  

that now the first thing you need to know is that  the tax brackets are different if you are married  

filing jointly or married filing separately  our editor will put up on the screen right now  

the 2021 tax brackets for married filing jointly  in the tax brackets for married filing separately  

so when you get married of course what you're  doing is combining your incomes and when you file  

married filing jointly you're showing the irs that  you want to report your income together and as  

you can see with these tax brackets once you get  married you can earn more money as a couple and  

pay less taxes so we're already off to a good  start right like you can basically double your  

income and have the exact same tax rate which  means together you can afford a better lifestyle  

but that's not it okay because when you get  married you also have a higher standard deduction  

so the standard deduction for married fouling  separately in 2021 is twelve thousand five hundred  

and fifty dollars meaning if you are filing  separately you automatically get twelve thousand  

five hundred and fifty dollars taking off of your  taxable income so just as a quick and easy example  

if you made twelve thousand five hundred and fifty  dollars for the entire tax year as a single person  

and then you get a standard deduction of  twelve thousand five hundred and fifty dollars  

then you have zero taxable income and of course  that means you don't have to pay anything in taxes  

now the standard deduction for  married filing jointly in 2021 is 25  

100 so you get even more of a tax deduction  from your taxable income so for example  

if you made 55 000 when you were single that would  give you a standard deduction of like we said  

hundred and 12 dollars which makes your taxable  income forty two thousand four hundred and fifty  

dollars also putting you in the 22 tax bracket now  stick with me for a second let's say that you get  

married and you still earn 55 000 and you  marry someone who earns 40 000 but because  

you're married you get a standard deduction of  25 100 that will make your joint taxable income  

sixty nine thousand nine hundred dollars which  is that ninety five thousand dollars joint income  

minus the twenty five thousand one hundred dollars  is the standard deduction for a married couple  

and this is great okay because it means that  will put you in a 12 tax bracket so in this  

example marriage will be more beneficial for you  because you are lowering your tax bracket thus  

bringing more money home okay so hopefully  i didn't lose you with all of the math but  

the bottom line here is that when you get married  because you have a higher taxable income threshold  

and a higher standard deduction amount  marriage can actually improve your tax  

outcomes which is sometimes referred to as a  marriage bonus but can marriage negatively affect  

your taxes let's go ahead and talk about it but  before i do if you are enjoying this video so far  

again please support us by hitting the like  button for the youtube algorithm also if you  

know someone who is getting married then make  sure you share this video with them because it  

will help them prepare for a successful marriage  okay so can marriage negatively affect your taxes  

here's the thing if we look back at the tax  brackets you can see that the tax brackets double  

between filing separately and filing jointly so  essentially the irs is giving you an opportunity  

to join equal incomes together and stay in the  same tax bracket so in general the more unequal  

two spouses incomes are the more likely combining  those joint incomes will put someone else into a  

higher tax bracket and this is sometimes referred  to as a marriage tax penalty so for example if you  

are not paying much in taxes like right now  like you're currently in the 12 tax bracket  

but then you go out and you marry a high income  earner that could elevate you into a higher  

tax bracket so you will need to think about  taxes a little bit differently okay but of course  

let's be honest if you're marrying a higher  income earner that is usually a good thing plus  

that higher income earner will benefit from  you in your tax bracket as well as that  

standard marriage deduction that we talked about  a little bit earlier so overall there is a lot of  

upside and tax benefits for getting married and  fouling jointly but again filing jointly can be  

unequally yoked so it's important to have these  conversations before you get married so that you  

and your partner especially the partner who is  in a lower income bracket or a lower tax bracket  

understands that their tax bracket and their taxes  may increase and that conversation around finances  

is going to be very beneficial for your marriage  and of course your overall lifestyle well i hope  

all this made sense right now i am considering  making another video on when you should file  

separately instead of filing jointly when you are  married so if you want an in-depth video on that  

please tell me in the comment section below well  that's it for now as always guys thank you so so  

much for watching for supporting and making  it to the very end we have some more videos  

coming up next so if you haven't checked those  out make sure you do and i'll see you over there