Marriage: Save tax benefits right after the wedding

Save taxes immediately after marriage

before tax advantagesWhen the rings are changed, the party is celebrated and the wedding guests are gone, there are still some formalities that a young couple has to do.

Insurance companies and banks must be notified, landlords and other contractors must be informed, new passports are requested. And of course, the wedding guests are waiting for a few prints of the most beautiful wedding photos.

However, young people should also have sound financial provisions. Because in the worst case, the young couple gives away a lot of money.

Take the check and check it as soon as possible after marriage: Tax benefits secured? Bauspar contracts applied for? Marriage contract set up?

 Tip: Whether you have secured benefits with a wedding or not: With a wedding loan ) you get better conditions for two than alone. In some cases, rescheduling may even make sense.

 

  • Change tax code

After a wedding, both spouses must change to another tax class, regardless of any tax benefits, because the tax class I is reserved exclusively for single persons.

In which tax code the spouses change after the marriage, they can decide for themselves. There are two possible variants:

On the one hand the change of both partners into the tax class IV, on the other hand the change of a partner into the tax class III, while the other partner transfers to the tax class V.

Particularly interesting is the second variant (tax class III plus tax class V), because with this you can save taxes by marrying! This variant is known as spouse splitting.

Spouse Splitting: Save Marriage Tax Benefits

Marriage tax benefits

With the spouse splitting there’s real marriage tax benefits – but only if one of the two partners earns much more than the other!

By marriage, saving taxes works for spouse splitting because of the fact that the income is aggregated by both partners and then divided into two equal parts (split). These two parts are the basis for the income tax of both partners, which has a positive effect especially when there is a large difference between the income of both spouses.

An example: married couple A earned a total of 80,000 euros. One partner earns 60,000 euros, the other partner 20,000 euros. Couple B also earned a total of 80,000 euros. Here, however, a partner earns the full 80,000 euros while the other partner has no taxable income.

Without spouse splitting, couple A would get an income tax total of € 19,729, and couple B would get a whopping € 25,428.

With the spouse splitting, however, the matter looks different, because here pay both pairs each 18,014 euros! Couple A saves 1,715 euros per year, while couple B gets tax savings of 7,414 euros per year!

Couples with significant differences in income thus save a large part of their income tax on spousal splitting, while for couples with similar or similar incomes tax savings are low or absent.

  • Riester pension

Who concludes a Riester contract, gets from the state a subsidy on the deposits – but only who is compulsorily insured in the statutory pension insurance.

However, married partners who are not eligible for this support (for example, the self-employed, 450-euro jobbers without statutory pension insurance and civil servants) can still receive these grants if the other partner is eligible. So only one spouse has to be eligible for a grant, so that both receive the state subsidies.

  • Bausparvertrag

Although there is no direct advantage of a marriage in building society savings contracts, married couples should nevertheless examine their options here. The bill is quite simple: With two Bauspar contracts you get clearly “more apartment” or “more house” than just one.

In the case of a real estate acquisition, on the one hand, it is much cheaper for borrowers if the equity capital is higher (lower interest rates on loans). At the same time, more favorable terms are once again offered if there are two borrowers for a loan. The risk that the loan can no longer be serviced is lower here – which rewards the bank with lower interest rates.

 Tip: Note the housing premium : Married couples are subsidized with 1024 euros per calendar year.

Reading tip: A installment loan is more useful in some cases than a real estate loan.

 

  • life insurance

If there is already a life insurance before the wedding, the spouse should be registered as a beneficiary after the marriage. This avoids later inheritance disputes, especially in the case of previous marriages and children.

Basically, all existing insurance (including household and liability insurance) should be examined after a marriage. Under certain circumstances, significantly cheaper conditions are possible.

  • Marriage settlement

Especially at the beginning of a marriage there is harmony and unity – a marriage contract is, however, intended for the bad times. With a marriage contract, married couples regulate different things, especially in the case of divorce.

Above all, three areas are regulated here:

  • The matrimonial property – Without marriage contract in the case of a divorce, a so-called gain compensation is carried out. If you do not want that, you can keep it in a marriage contract.
  • The Compensation – This is about any pension entitlements that were acquired in the course of the marriage and after marriage may be in question.
  • Maintenance after marriage – Anyone who wishes to make deviating agreements to the statutory provisions can do so with a marriage contract.

A marriage contract is only valid if it has been certified by a notary.

Directly after wedding: determine benefits as soon as possible

Whether or not you want to secure benefits through a wedding: ask as soon as possible after marriage what things are important to you and which are not. Because everyday life often returns faster than you think – and postponed duties quickly fall into oblivion.

Read Hint: If you are just married and have just moved in, follow our renovation tips .

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Is canceling a credit card bad for your credit rating?

Cancel or not a credit card: this is probably the most frequently asked question about personal finances. Everyone wants to know if they should cancel a credit card that is no longer used or simply use force and charge nothing again.

The problem is that both answers are good. It depends on several factors such as your goals, your credit history, your credit rating, and your spending habits. The main problem in canceling a credit card is that this cancellation will not be without consequence. This will affect your credit rating and other aspects of your financial life will also be affected.

There are many good reasons why you would like to cancel a credit card, including wanting to reduce the number of cards you have, try to rely less on credit or find a card that best suits your needs. Whatever your reason, consider the following factors before canceling your credit cards.

Your credit history and the age of your accounts

You build a credit history when you use a credit card. All your actions, payments, and even mistakes are recorded on your credit report. Your credit history is very important because it provides information about your credit habits to future creditors and lenders when they need to check your credit rating. Before canceling a credit card, you need to know whether or not the cancellation will negatively affect your antecedent and so on your credit rating. If you want to cancel one or more credit cards because you have too many, cancel the most recent ones. Try to always keep your oldest cards. Canceling an old card will not automatically affect your credit rating since accounts remain visible on your credit report for 10 years.

By cons, after 10 years, you may regret having canceled this account that could have 10 years more. because the account could be 10 years older.

Points and fees

Does the card you want to cancel cost you a fee? Or do you accumulate points that are really useful to you? These are some questions you need to ask yourself seriously before deciding to cancel a credit card. If you have a rewards credit card with high annual fees, ask yourself if these points are worth the cost.

Finally, if you decide to cancel a rewards credit card, make sure you use the points or at least know what will happen to those points after the cancellation. It would be a shame to waste all the points accumulated with a simple cancellation.

Your percentage of use

Your credit usage percentage is the factor you need to pay the most attention because it will have a direct and immediate effect on your credit rating in case of cancellation. Your credit usage percentage is the amount of available credit that you must use in relation to the amount you actually use. You can calculate this amount by dividing your current credit card balances by the total limit of your credit cards. In general, you should make sure your usage percentage is 30% or less.

For example, say you have 3 credit cards and each has a limit of $ 5,000, which means your total credit limit is $ 15,000. If you currently have a balance of 4,000%, this means that your usage percentage is 26% (4000/15000), which is very high.

The use of credit or your total debt level is one of the top five factors that directly affect the calculation of your credit rating. If your credit percentage is too high, your credit rating will be negatively affected. In addition, potential lenders do not like credit utilization ratios that are too high. This shows that you could have a debt problem.

That is why it is important for you to consider all this before canceling a credit card, especially if you might be looking to apply for a mortgage or Palehorseandrider loan in the near future. A low credit rating and a percentage of credit usage may prevent you from being approved.

The balance of your cards

This factor is certainly less important than your credit usage, but you should still consider it anyway. If you decide to cancel a credit card, you must make sure that you have refunded all the balance owing. A provider may allow you to cancel a card even if it has a balance. Setting aside an outstanding balance or interest charges could seriously affect your credit rating.

Make the right choice for your situation

Your credit rating is very important, but it is not as important as being debt free or having good financial management. If having too much credit card affects your credit rating or your debt level, we believe it is in your best interest to manage your financial situation before your credit rating. But we also believe that you need to project yourself into the future a bit more, especially if you see a mortgage or loan.

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