It is essential to learn about tax benefits for couples to maximise savings and achieve financial goals, whether for the long-term or short-term period.
Read on to learn in detail about how tax benefits for couples are compounded.
- Availing a Home Loan Together:
Home loans are usually an attractive option for people looking to save taxes, and for couples, the benefit is double. However, both spouses must be eligible to avail the loan. The tax benefits for couples are shared in the same ratio as the loan burden. These benefits are not available if one individual purchases a property in their spouse’s name, without the spouse monetarily contributing.
- Availing a Life Insurance Policy Together:
Similar to home loans, an insurance policy is another method commonly employed by people to save taxes. If a couple buys a term life insurance policy together, they can claim deductions under Section 80C of the Income Tax Act. The tax deductions available can be claimed individually by both husband and wife.
- Plan Investments Carefully:
A couple can plan their investments such that the overall tax liability of the household decreases. For instance, if one spouse is in the 30% tax bracket, they are advised to make higher tax investments while the other spouse focuses more on instruments intended to maximise savings. By planning well in advance, tax benefits for couples can be compounded significantly.
- Invest Through Spouse:
If an individual has exhausted their tax deduction limit under Section 80C of the Income Tax Act, they can invest in a tax-free instrument through their spouse. Since there is no upper limit on the amount of money that can be gifted to the spouse, any amount can be transferred to the spouse and then invested in instruments which offer tax deductions (Eg. ULIPS/PPF/ELSS).
- Save tax on school fees:
Children’s school fees are another option for couples looking to save on taxes since they are eligible for deductions under the Income Tax Act’s Section 80C. The deduction, however, is limited to only two children and can be claimed by the parent who is paying the fees.