Menu

Life Events

Tips for Choosing a Tax Filing Status After Getting Married

by
Keith Vincent
on
10/28/2015
Tips for Choosing a Tax Filing Status After Getting Married

There are a lot of decisions to be made when two people decide to get married, but planning the celebration and honeymoon rarely includes addressing how the newly minted couple will file their taxes. It's certainly fair for them to be distracted by the wedding details, but at some point there are choices that need to be made as to whether they'll file jointly or separately. The time of year that you get married has no impact on the decision – you're considered married for the tax year whether you get married on January 1st or December 31st.

The question of whether to file jointly or separately is one that must be taken seriously, as it carries serious economic ramifications. Marriage can have a significant impact on the tax that is owed, and the difference between filing jointly or separately can be wide, and surprising. When a couple files jointly it means that their incomes are added together. If they are both bringing money to the table, there's a chance that the entity's higher combined income will have a disappointing impact, including tax benefits disappearing or diminishing. The most commonly seen ramifications of filing jointly include the couple finding themselves in a higher tax bracket, being taxed at a higher rate on capital gains, the child care credit being diminished and limits being placed on the amount that can be deducted for their IRA. It can also trigger a tax on net investment income, trigger taxes on Social Security income, reduce the Earned Income Tax Credit and itemized deductions for medical expenses, and even phase out many itemized deductions or personal exemption deductions to be phased out entirely.

Though some think that the simple solution to this impact is to file separately, the government has enacted tax laws that take the teeth out of that method of avoidance – married taxpayers whose high incomes make them subject to the loss of tax advantages aren't able to make their high combined household income disappear by filing their taxes separately.

Marriage isn't always bad news for taxes. When only one spouse is bringing in an income, the impact is often a lower joint tax bracket and the good news of additional exemptions that can be claimed. Depending upon the exact numbers and income levels, there are some high income limitations that may have negatively impacted the working spouse when they filed single that a joint return reduces or even eliminates, meaning a lower overall tax burden.

The plain fact is that the tax code is written to encourage married couples to file jointly and prevent then from filing separately, and it does that in a number of ways. When you file married but separate you face a higher combined income tax in which if one spouse itemizes deductions, both are required to: The possibility of taking the standard deduction is withdrawn. Couples who receive Social Security benefits and who file jointly receive a benefit in which none of the income is taxed until a threshold of $32,000, represented by half Social Security benefits and other income) is reached. If the couple files separately that $32,000 threshold is automatically dropped to zero, making the benefits taxable from the start.

There are also important legal ramifications to whether a couple files jointly or separately, and these must be considered as well. When married taxpayers file jointly each is individually responsible for tax and interest or penalty on their returns, as well as jointly. When the filing status is separate, the legal liability is also separate, and each are only responsible for their own tax burden.

As you can see, getting married is far more complex then simply saying I do and enjoying each other's company for the rest of your lives. Sometimes best to talk to a tax professional before making these decisions. 

share this post
Search for matches...
Keith Vincent

Keith Vincent

Ken Riter is a Certified Public Accountant based in Holladay, Utah. He is a graduate of the University of Utah and brings broad financial and tax preparation experience to bear for each of his clients. With strong computer systems experience, Ken has empowered many business clients to gain better control of their finances by utilizing the power of the computer. His years of tax planning and tax preparation experience give his clients a distinct advantage in their tax needs. Starting in Salt Lake City, our company history is built on a tradition of service, technical expertise, and innovative thinking to meet the needs of a rapidly changing world.

RITER & COMPANY, CPA
★ ★ ★ ★ ★
14 reviews

Utah

Firm Profile

Recommended Professionals

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

We know tax and accounting issues are complicated.

Do you have additional questions on this topic for this author?

Related Posts

Latest Posts