Marriage Tax Penalty

Marriage and Taxes

Money can't buy you love, but it certainly can have a way of causing trouble in a relationship. Keep your love light burning with a little planning, a lot of communication and a few tips to manage your credit:

1. Talk it Over - Talking about your financial goals with your dearest darling is essential for a happy life. Discuss your main objectives for saving money and budgeting. Make plans for reaching your big goals, like buying a new house or a long vacation, and help each other stay on track.

2. Reduce your Debt - Large amounts of debt in your life can cause unneeded stress for couples. Work on reducing your debt amounts together and you should see your anxiety levels drop at the same time. The first step to reducing your debt is understanding it. Get a complete list of your debts in seconds with an online credit report.

3. Co-Dependency - Its okay for married couples to open joint checking accounts, but consider keeping separate accounts too. Work together to decide how much each person will contribute each month and then ask your banks to have the amounts automatically sent to the joint account. This plan lets each person stay in charge of their own money while still saving together for the big things. Be cautious about opening joint checking accounts or co-signing loans with your beloved. Because you both are legally responsible for the account, your credit score could be damaged by your sweetie's bad financial behavior even after you go your separate ways.

4. Love Tax - The marriage tax can put a damper on even the most delightful newlyweds. This "marriage penalty" occurs when the standard deduction for working, married couples filing jointly is less than that of two, single adults cohabitating. For couples who earn the same amount each year, filing their taxes together and accepting this tax can cost them money. In turn, couples who earn substantially different amounts each year can save a bundle by filing their taxes together. Test your options by calculating your taxes separately and then again jointly. The lowest tax choice should go to the IRS in April.

5. Team Score - Whether planning to buy a home or eyeing a new car, improving your credit scores will help you get a better deal at the loan desk. Working together to reduce debt amounts, pay bills on time and balance the accounts will help to bring the low score up even faster. Increasing your credit score by a few points can save you thousands on a loan.