HOW OUR TAXES ARE GOING TO CHANGE | Marriage and Taxes


so Meshack and i have filed our 2019 tax
returns and we received our tax refunds a couple of weeks ago which officially
means that our last tax season filing as single people is over and as of next
year we will be filing as a married couple in this video I’m gonna talk
about how getting married is gonna affect Mehack and I’s tax situation for
2020 I’m also going to talk about some of the differences between married
filing jointly versus married filing separately and the things you can and
can’t do with the different tax filing statuses as a married couple so if
you’re interested in that make sure you stay tuned hey wealth builders what’s up it’s Akeiva
welcome back to another episode of The Bemused where we are making sense of all
things money for the bewildered and confused young adult and if you’re not
already part of the squad go ahead and hit that big red subscribe button and
also hit the notification balance so you never miss when we post new videos just
like this one for those of you who are new to the channel just for context my
fiance Meshack and I will be getting married later this year and so we have
started thinking about how getting married will affect our finances and
specifically in this video our taxes so let’s start with the basics when it
comes to filing taxes there are only five federal tax statuses that you can
choose from either single married filing jointly married filing separately head
of household or qualifying widow or widower with a dependent if you are
married that means you only got two to choose from either married filing
jointly or married filing separately and your filing status is determined as of
your marital status for the end of the year so if you got married on December
31st 2020 you will still need to file a married return for the tax year 2020 so
meshack and I will therefore either be filing married filing jointly or married
filing separately for 2020 now let’s talk about our specific tax brackets so
right now both meshack and I fall into these twenty-two percent marginal
federal tax bracket and when we get married
assuming that all other variables stay the same in terms of income we would
still both be at the 22 percent tax bracket so in that sense there isn’t
necessarily a marriage penalty or an advantage it’s pretty much keeping
things the same whether we file married filing jointly or married filing
separately it’s still all going to be the twenty-two percent marginal tax
bracket and just for reference I’ll link in the
description box to a graphic that shows all of the federal tax brackets now
let’s talk about the itemized or standard deductions so historically
meshack and I have both just taken the standard deduction for our taxes which
for 2020 I believe is twelve thousand four hundred dollars per person and if
any of this sounds like gibberish to you we have a video that we made last year
breaking down exactly how taxes work so you can become familiar with the terms
like AGI and deduction and standard deduction itemized deduction all those
things you can actually understand how taxes are calculated and how they work
so I will link that video up here in the cards for you to reference and then come
right on back to this one so neither Meshack or I usually have expenses that
are high enough to worth taking itemized deductions so we both usually take the
standard deduction and so that standard deduction is gonna be the same whether
we file jointly or whether we file separately so so far we’re pretty much
staying on equal footing as when we were single one change Meshack made that will
affect our taxes this year is that he actually opened and contributed to a
health savings account or HSA for short those contributions are made pre-tax
similar to if you were contributing to a traditional 401k plan so the
contributions he made to the HSA will reduce our taxable income which it would
have done anyway it just would have been on his return versus mine and so really
it’s just gonna be combining the benefit however with getting married the
contribution limits are higher when you’re married than when you are single
which makes sense however he doesn’t contribute nearly enough to the maximum
that is even gonna affect us at least this year and so that’s just a nice
aside now in terms of business gains and losses as you guys know I am an
entrepreneur I do have two businesses that I run on top of my 9 to 5 one being
the bemused which is centered around our YouTube channel that you’re watching
right now if you guys didn’t know the bemused is a sole proprietorship it is
my company so all of the expenses all of the income everything like that
historically flowed through to my tax return and previous to this like last
year it was just losses because we weren’t making money yet but in 2020 now
we are and so I expect to at least have some type of profit from the bemused this
year so meshack will therefore reap any benefits of any business losses that we
potentially have or even the business income will also affect him because that
will just roll up onto our returns especially if we are filing jointly one
big thing that’s really gonna affect us going forward is the student loan
interest deduction as you guys know Meshack and I are in an unspeakable amount
of student loan debt you guys already know the situation you already know what
it is so in 2019 I actually made enough income that I actually started to phase
out from being able to take the student loan deduction so I wasn’t able to take
the full amount because of my income however with a combined income I don’t
think that we will be in the phase-out range anymore with meshack and i’s
combined income because i do make more than Meshack currently if all stays the
same then we will not be in the phase-out range anymore and we’ll be
able to take advantage of the full twenty five hundred dollar student loan
interest deduction however the student interest deduction is twenty five
hundred dollars per return not per person so before where I was getting my
own twenty five hundred he was getting his own twenty five hundred student loan
deduction if we do married filing jointly it’s $2,500 per
return so that’s gonna kind of suck and that’s still better than filing married
filing separately because if you file separately you can’t take the student
loan interest deduction at all and so that’s gonna cost us about five hundred
and fifty dollars worth of tax savings which is gonna suck but like I said it’s
better than man filing separate because something’s better than nothing another
consideration is actually how we’re gonna file our taxes so Meshack and I
have been doing our own tax returns for free for the past couple of years either
using free file software through TurboTax I think last year I used H&R
Block this year I ended up using Credit Karma because my income was too much to
use one of the Federal Free File programs and Credit Karma allows you to
file for free regardless of your income so that’s the software that I use dto
find my 2019 tax return however as you guys know Meshack works in Maryland
he’s a Maryland resident and I worked in Massachusetts so therefore if we file a
joint return we will need to file taxes in both Maryland and Massachusetts
because we both have income coming from two states and one of the limitations of
Credit Karma is that they only allow you to file a tax return in one state so now
we got to figure out how we’re actually gonna file our taxes because all of our
free options seem to now haven’t been extinguished but we’re gonna do some
more research on that and see what we can come up with for next year so
that’ll be a fun little challenge now let’s talk about some other differences
between married filing jointly and married filing separately and some of
the things that you want to keep in mind if you are like us and trying to decide
which filing status is better or more advantageous for it you and your
situation in the vast majority of cases it is better for couples to file married
filing jointly but there could be some situations where it makes a lot more
sense to do separate returns for example if you just don’t want to be liable for
any foolishness that your spouse is doing to try to evade taxes you may as
well file a separate return so that you’re not on the hook for tax evasion
and no matter what the tax benefit you’d rather go the safe route that’s an
option that maybe a consideration that you want to take into account when
deciding if you want to file together or separately another important thing is
education benefits like if you’re in school and you’re taking the Lifetime
Learning credit or the American Opportunity Tax Credit just know that
you can’t take those kinds of things similar to the student loan deduction if
you are filing separately most of those education tax credits and deductions and
benefits are nixed if you are filing separately so keep that in mind another
thing and this isn’t necessarily tax related specifically but getting married
is going to affect Meshack’s student loan payments a lot as you guys have heard us
mention Meshack is currently on the public service loan forgiveness program and so
he is on an income driven repayment plan if we decide to file our taxes together
that means that they are going to then count my income along with his and his
payments are going to skyrocket up to the point where it doesn’t even make
sense to do the income driven repayment plan anymore because the payments are
gonna be much more than other plans like the standard repayment plan even when I
did my um my back of the napkin calculations and so if we do file
jointly we just know that he won’t be able to stay on an income driven repayment
plan anymore which we’re still discussing I mean I don’t know and I
don’t think he really knows either if he intends to stay in the public sector
forever if it’s not something that he foresees doing for the duration of time
maybe we’ll just bite the bullet and file jointly and just switch his repayment
plan to something else that makes sense or a way to get around that would be
to file separately so that my income isn’t counted with his and he can go
about his public service loan forgiveness journey in peace but those
are a few considerations that meshack and I have been thinking about and that
hopefully if you’re in the same situation now you have to think about
when it comes to deciding whether to file your taxes jointly or separately I
hope this video was super valuable for you guys if you have any questions or
comments or you want to share your experience with filing taxes for the
first time with a new spouse I’d like to hear your experience I mean this is
going to be new for us so leave your comments
down below you guys know we love interacting with you guys and answering
your comments as much as possible so we’ll see you down there
also if you guys want to cop some wealth builders merch I’ll make sure to have a
link to our Etsy shop in the description box below as well as somewhere floating
upon this screen we release some new designs a little while ago and I’m super
excited about and I’m gonna start wearing them in some future videos so
look out for that thank you guys for watching and I will see you in the next
video

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