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5 Ways Getting Married Can Change Your Finances

For better or for worse, tax structure will likely change with marriage. While not a driving factor behind the decision to (or to not) get married, this change is something couples should think about and discuss. If you’re counseling clients about to tie the knot, here are five scenarios they might face.


If one of spouse earns more money, they’re likely to receive a tax break

Lets say neither client has children and one earns more money than the other. As long as they don’t itemize their deductions, their combined federal income tax burden would likely go down compared to what they paid before they got married.

Why? Joint filers have wider income brackets, meaning less of their combined taxable income would be taxed at the higher earner’s top rate.

High-income couples earning the same amount are likely to receive a penalty

If they’re both bringing home six figures, they might see a penalty because their combined, taxable income would push them into a higher tax bracket. This only applies to high-earning couples that don’t have children and don’t itemize their deductions. 

How does this happen? The amount of income subject to the 10 percent and 15 percent tax brackets for joint filers is double for single filers. This isn’t the case of for any of the higher brackets.


One spouse’s debt will affect the other in some ways, but not in others

Student loan debt is one of the common debts young people bring into a marriage. Any student loan debt and payment history will stay on the holder’s credit history and doesn’t affect the other spouse.


If they decide to take out a loan together, the debt holder’s credit history will impact the interest rate the couple is charged. This is because every dollar paid toward student loans isn’t contributing towards monthly expenses, retirement funds or other financial plans.

If they have a child, have low income and are earning the same amount, they’re likely to receive a penalty

As joint filers, they will likely be eligible for less of the Earned Income Tax Credit than if they were to each claim it as an unmarried couple. This is because their combined taxable income puts them in the phase-out range for EITC filers.

But some couples won’t see much change

The situation for every couple is different, and couples bringing in similar paychecks between $40,000 and $150,000 probably won’t see much difference at all. This is because their combined income probably won’t be taxed more than 25 percent. 25 percent will also probably be the same rate they paid when they were single.

This article was sourced from CNN Money

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