Millennial Money: 4 Ways Married Couples Can Use Tax Breaks to Build Wealth

Getting married can help you financially, and there are special tax benefits for married couples. Here are four ways married couples can use these tax breaks to grow their money.

Investing: When you get a tax deduction or credit, you can use that extra money to invest. You can invest in things like improving your skills, retirement accounts, or even alternative investments like gold or music catalogs. The key is to choose investments that match your goals.While using money from tax deductions or credits to invest is not directly a tax strategy, the investments themselves may carry tax advantages. For instance, investing in tax-advantaged retirement accounts like IRAs or 401(k)s can yield further tax benefits.

Real Estate: If you own a property as a married couple, you can sell it and exclude some of the profit from taxes, up to $500,000. This tax-free income can be used for buying another property or investing elsewhere. There are rules to qualify for this tax benefit.  is often referred to as the "Section 121 Exclusion" or "Primary Residence Exclusion". To qualify for the $500,000 exclusion (or $250,000 if single), there are some rules. Typically, you must have lived in the home as your primary residence for at least two of the last five years before the sale. There are exceptions and specific conditions, so one should always consult with a tax professional before making decisions.

529 Plans: These are investment plans for education that grow tax-free. Married couples can use them to save for educational expenses for themselves, their kids, or other family members. Some states offer tax deductions for 529 plan contributions, and married couples often get double the deduction compared to single filers.Earnings in a 529 plan grow tax-free and will not be taxed when the money is taken out to pay for qualified education expenses. The state tax deduction for contributions varies by state.

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Entrepreneurship: If one spouse is an entrepreneur or you both run a business, you can deduct business losses from your joint tax return. In 2023, married couples can deduct up to $524,000 in losses, which can be used to invest in the business, start a new one, or pay down debt. The ability to deduct business losses on a tax return can be complex, especially with the Tax Cuts and Jobs Act (TCJA) having placed some limitations on the deduction of business losses. As for the specific figure of "$524,000 in losses" for 2023, one would need to verify this with the latest tax guidelines or with a tax professional, as these figures can change annually.

Lastly, while these general strategies might be valid for many taxpayers, individual circumstances can greatly affect how these laws apply. It's always advisable to consult with a certified tax professional or CPA to ensure that any tax strategy or deduction is both beneficial and compliant with current tax laws. For more personalized financial advice, consider talking to a tax advisor or financial planner.

Disclaimer: The information provided in this article is for general informational and educational purposes only and is not intended to be a substitute for professional financial or tax advice. Every individual's financial and tax situation is unique, and the strategies and insights shared here may not be suitable for everyone. It is crucial to consult with a certified financial planner, tax professional, or other qualified expert regarding your specific situation before making any financial or tax-related decisions.

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