Marriage: Tax Bonus or Penalty?
So K and I are getting married. We were looking at October, but we might put it off until we can make better money, get out of debt, and throw a better party. However, if it'll get us a tax deduction, we're down with making it legal by December 31. If we'll get penalized, we might as well wait.
How does the marriage tax filing thing work? Can we expect to benefit or are we going to get shafted? Should we do it by the end of this year or does it make no difference if we put it off?
Re: Marriage: Tax Bonus or Penalty?
We're closer to the $40K/$20K example, so that helps. Guess we should do it this year then. Thanks!
Re: Marriage: Tax Bonus or Penalty?
unless your combined income is well into six figures for both of you, it's not that big a deal tax-wise to get married. you can check the tables out on irs.gov for married filing jointly vs married filing separately vs. single filing. (filing separately while married is often a tax hit, but most people in that position don't have financial situations where it is a hit).
marriage is usually slightly better from a tax standpoint than living together and filing separately. plus, it's just handier for next of kin and living will issues, all that stuff.
Re: Marriage: Tax Bonus or Penalty?
Since you live in California, you may also want to check into the state income tax implications. As a total generalization for people living in high tax states, filing married joint will cost you less in total taxes as long as the lower income spouse's income doesn't exceed 2/3rds of the higher income spouse's income.
However, if one person's income falls below the state 'official poverty level' i.e. the income cutoff where that person could be eligible for MedicAid / Food Stamps / rent subsidies / utility subsidies, then getting married will instantly kill that eligibility. This is a major consideration in states like California and New York.
Re: Marriage: Tax Bonus or Penalty?
^^^ We left California on January 1. We live in Oregon now, thank G-d!
And I don't get any public assistance. It sounds like we would benefit from making it legal by the end of the year, so I'll try to make sure we do. Thank you all very much! I really didn't want to put it off anyway, LOL!
Re: Marriage: Tax Bonus or Penalty?
You certainly can make it legal before throwing the official wedding, too.
Re: Marriage: Tax Bonus or Penalty?
Yeah, but I'd rather just have one anniversary. And since I eloped the last time, my family would never forgive me if I did it again. I'd rather throw a real wedding with a party though... G-d forbid I should get married in my mom's backyard or something, with goat shit on my shoes.
Re: Marriage: Tax Bonus or Penalty?
^ i'm getting married in my mom's backyard :( i think it's going to be hella fun!
Re: Marriage: Tax Bonus or Penalty?
No, no, mom's backyard weddings can be beautiful! I just meant MY mom's backyard. It's trashy and ugly and there's goat shit all over the place.
Re: Marriage: Tax Bonus or Penalty?
oh, you meant that literally.
gotcha!
Re: Marriage: Tax Bonus or Penalty?
That was really informative! Thank you! I emailed it to K.