Guide and benefits of Family Tax Planning for married couples| PNB MetLife
Tax planning can be a little overwhelming, but like all big tasks in life, it becomes much easier when you have someone to share that load with. If you are married, you and your spouse can take on the task of family tax planning together and make the most of the many tax benefits that you can enjoy together.
Keep in mind that as an Indian citizen, you are not compelled to combine your incomes and tax filings. This means that you both can file for income tax returns individually and utilise the double benefit of tax exemptions for your household. Read More
As the year 2019 draws to a close, it is the right time to get your family tax planning started. To aid you out along the way, here are a few useful points that will help you and your spouse make the most of tax benefits together:
- Making investments:
One of the greatest advantages of planning for taxes as a married couple is that you can gain incredible tax benefits for your investments, provided you play your cards right. If both of you are salaried employees or in general earning members, your combined incomes can make for a significant amount of investment capital.
A higher capital provides you with more investment opportunities and the interests generated from these investment returns would be considerable as well. But the greatest aspect of investing together, however, is that you can determine how those returns would be taxed. So, instead of investing individually, it is wiser for the spouse whose annual income falls in the lower tax bracket to do the investments.
While they focus on generating wealth with lower taxes for the household, the other spouse can focus on taking care of the regular expenses. At the end of the day, not only will the expenditure responsibility be effectively divided, but the overall tax burden on the family will be reduced.
- Home loans:
No family tax planning is complete without taking into consideration your place of residence, that is your home. As a married couple if you are slooking to purchase a home of your own, you should strongly consider availing a joint home loan. Not only does this reduce the financial burden by half, but also helps double the tax benefits your family can enjoy.
Under Section 80C, you can claim tax deductions on your home loan contributions, although this deduction is capped at Rs. 1.5 lakhs. However, if both you and your spouse are co-borrowers and joint owners, you can both claim the tax deduction and pay your home loans off more effectively.
Moreover, another tax benefit that married couples can make the most of is with respect to owning properties. According to income tax laws, each individual can self-occupy one property without paying any taxes on it. So, if you and your spouse own two properties, you can own them individually and claim them both as self-occupied for each, thereby avoiding any taxes on them.
As a married couple, not only do you have to financially plan for the present, but also for the future. That is why it is always in the best interest for your family to safeguard their future by availing a good life insurance or term insurance plan. What’s more, various sections of the Income Tax Act, such as Section 80C, 80CC and 80CCE offer tax deductions on the contributions towards your insurance coverage.
As an individual, you can claim up to Rs. 1.5 lakh as a tax benefit on your insurance premiums. However, if both avail term insurance policies, you can claim a total deduction of up to Rs. 3 lakhs. If your term insurance has a medical rider, you can even claim an additional tax exemption of Rs. 25,000 under Section 80D. As a result, this aspect of family tax planning not only reduces your overall tax liability but also guarantees a safer, more secure future for your family. Browse the website to know more about Term Insurance and the various Term Plans offered by PNB MetLife.
- Expenses for Children:
One essential point to consider during family tax planning is that of your children. As a married couple, you can avail tax benefits for a variety of expenses contributing to their growth and development. According to Indian income tax laws, you can avail tax deductions of up to Rs. 1.5 lakh for tuition and education fees, under Section 80C.
As tax-bearing citizens, both spouses can avail a combined total of Rs. lakhs for their children’s education feeds. Also, while individually a parent can claim tax deductions on tuition expenses for two children, as spouses, you can avail this benefit for up to four children.
As you share the household and financial responsibilities in your marriage, so should you each partake in the responsibilities of tax planning. Hopefully, with these points about family tax planning, you and your spouse will be able to make the most of the variety of tax benefits that you can avail. With upcoming income tax season make sure you and your spouse have a smooth and convenient tax planning ahead.
*Tax benefits are subject to conditions and other provisions of the Indian tax laws and are subject to amendments made thereto from time to time.
The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.
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