Should You Get Married (Or Divorced) For Tax Reasons?

I was super excited about doing my taxes this year. I got married last June and couldn’t wait to exercise that most glorious privilege of matrimony — the ability to file jointly.

But after my wife and I filled out our tax return, I wondered … did we actually save any money, or did we, like an estimated 38 percent1 of couples, end up having to pay more because of our new legal status?

We’re not the only ones to have wondered about this question. Nick Kasprak, a developer at the Center on Budget and Policy Priorities, and Kyle Pomerleau, an economist at the Tax Foundation, recently ran a series of simulations to figure out which married couples benefit this year and which don’t. Fortunately, they were willing to share their data with us. (They also shared it with our friends at The Upshot, who published a story about the so-called marriage penalty earlier on Wednesday. Like many of you during tax season, I was a little late to file.)

Whether you get a tax bonus by being married or end up paying the marriage penalty depends on how much income you and your partner make and how it’s divided between you. Type your own numbers in below to see how marriage affects your taxes.

Turns out that according to this calculator, my wife and I earned a small marriage bonus this year, meaning we paid less tax than we would have if we hadn’t gotten married. So I think we’ll stick together!

If we’d had a child, the tax impact of our getting married would have been different — in fact, we would have had to pay a marriage penalty. The reason is that if we hadn’t gotten married, one of us could have filed as a head of household and claimed our child as a dependent, which in some cases is better than being married and filing jointly.

If you have one child, then your estimated federal tax rate is -1.7% if you’re married, and it’s -6.2% if not. (Negative values mean you actually earn a credit instead of paying taxes.)

So your marriagepenaltyis roughly +4.5, or $1,350 .

You can read the rest of the article here: http://53eig.ht/1TRNA8L

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By | 2016-06-01T20:44:49+00:00 May 12th, 2016|Blog|0 Comments

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