Connect with us


5 Tax Tips That Can Save You Money For Married Couples



5 Tax Tips That Can Save You Money For Married Couples

It can be stressful enough to file taxes on your own, but adding a spouse to the mix makes things even more complicated. Fortunately, filing taxes as a married couple has many advantages, such as access to credits and deductions that may only be available to married couples filing jointly.

Here are some tips that may help you save money if you’re filing your taxes this year with your spouse.

  1. Jointly file to get your tax bracket lowered.

This is a big one because filing jointly with your spouse offers a lot of other tax benefits, some of which are listed here. Approximately 95% of married couples file jointly, choosing to do so due to the numerous advantages.

The income of married couples filing jointly is taxed at a lower rate, which is one of the biggest advantages. The marginal tax rate for an individual earning $200,000, for instance, is 32%. But the tax bracket is only 24% if a married couple with one income makes $200,000 for their household.

Nearly all married couples benefit from being in a lower tax bracket; however, there are a few instances in which filing separately makes sense. When one can claim numerous itemized deductions and there is a substantial income gap between the spouses, or when one is legally separated or divorced, people usually take this action.

  1. Fill out your IRA

If you have a source of income, you can make contributions to an individual retirement account (IRA). However, married couples filing jointly have a unique opportunity wherein the income-producing spouse can make an IRA contribution to the non-working spouse.

For example, if one partner works and the other stays at home to raise money, the couple can each contribute $6,500 (or $7,500 if they are over 50) to their IRA in 2023, for a total of $13,000.

This implies that married couples with traditional IRAs can drastically reduce their taxable income, even if one partner does not work. For instance, you could reduce your adjusted gross income (AGI) and tax liability by $13,000 if you make the full $13,000 contribution in 2023.

  1. If you are eligible, claim the earned income credit

By claiming the Earned Income Tax Credit, married couples with low to moderate incomes may be able to reduce their tax liability (EITC). Your income, marital status, and the number of children you have all affect how much you receive.

For example, a married couple filing jointly with two children and a combined income of $55,000 may be eligible for an EITC of $938. A family with three or more children would receive a $1,763 credit.

By providing answers to questions on the IRS’s online EITC assistant, you can find out if you qualify for the EITC. Another useful EITC calculator is available on the Center on Budget and Policy Priorities website. It calculates your potential EITC benefit based on your filing status, household income, and number of children.

As long as you and your spouse meet the requirements, you can claim the credit even if you are childless. The good news is that if your credit exceeds your tax liability, you will receive a refund if you are eligible for the Earned Income Tax Credit (EITC).

  1. Lower the price of filing taxes

The cost of separate filings is avoided for married couples filing jointly, which could result in substantial tax season savings.

Tax filing typically costs between $300 and $600. You may have to pay $1,200 if you file separately for your spouse’s returns as well as your own. Additionally, you might have to pay a lot more to file if your particular tax situation is more complicated—for instance if you’re self-employed or have income from multiple states.

The cost of filing separate returns will probably increase if you hire a tax professional because of the extra hours of work involved.

  1. Apply the standard deduction.

A standard deduction of $27,700 is available to married couples filing jointly for the 2023 tax year. Though some believe itemizing deductions will result in greater tax savings, the majority of people find that taking the standard deduction reduces their tax liability.

Selecting the standard deduction is not only a much quicker option than gathering all of your itemized deduction documentation, but it will also probably result in tax savings. The standard deduction is likely taken by nearly 90% of filers for this reason.

There are a few situations in which itemizing is advantageous, such as when you own a home and your total real estate taxes, insurance premiums, and mortgage interest exceed the standard deduction. Alternatively, you might want to think about itemizing if your out-of-pocket medical costs exceed 7.5% of your AGI.

That being said, most married couples will save more money if they choose to take the standard deduction.

One more money-saving tip

Using tax software makes it simpler than ever to take advantage of all available tax credits and maximize your deductions. The good news is that households making $79,000 or less in 2023 will be eligible for free filing thanks to a partnership between the IRS and a few tax software providers, such as TaxAct and TaxSlayer.

Visit the IRS website to learn more about the free filing option. Just make sure you have your previous year’s tax return ready so you can enter your AGI to find out if you qualify.

follow us on google news banner black


Recent Posts


error: Content is protected !!