Happy Valentine’s Day week to all of the lovebirds out there! Whether you’re enjoying a night out on the town or staying in for a movie night, we want to give you even more reasons to celebrate with your loved one with…you guessed it: tax benefits!
So, grab your significant other and read up on some of the perks of being coupled up come tax time.
Married couples filing jointly generally benefit from lower income tax rates than couples filing separately. This is especially attractive to couples with differing levels of income, but this is not the only way that marriage can have a positive impact on the size of your tax bill. A number of tax benefits may only be available to couples who file jointly, including:
Unlimited Marital Deduction
One of the most powerful tax benefits available to married couples is the unlimited marital deduction allowing assets to be transferred to a surviving spouse tax-free. Don’t ignore this! A freshly married couple in their mid-20s might not be thinking about estate planning, but as the years pass, it will increasingly loom large in their future decision-making.
Larger Tax-Free Gifts
Married couples also get more bang for their buck when it comes to the gift tax exclusion. Currently, there is an annual federal gift tax exclusion of $17,000 per spouse for 2023 ($18,000 for gifts made in 2024) meaning your recipient can “immediately and without restriction use, possess or enjoy the gifted property” without tax consequence to you. The gift tax exclusion applies to gifts for each donee. As a married couple, you get to combine this exclusion and can gift up to $34,000 tax-free per donee. So, this means that a married couple can gift up to $68,000 to two grandchildren tax-free.
As your wealth grows, be mindful of ways to use the gift tax exclusion to strategically transfer assets to loved ones (or between each other).
You Can Qualify for Earned Income Tax Credit
As a married couple filing jointly, you may have an easier time qualifying for Earned Income Tax Credit since qualifying income for married couples can be more than someone that is single (up to $63,398 married filing jointly, up to $56,838 single for tax year 2023). This is really important to keep in mind since the Earned Income Tax Credit can be up to $6,935 for a married couple with three kids for tax year 2023.
Don’t worry about knowing these tax rules. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
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