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