Ah, the joys of new marital bliss. Now … about those tax returns.
If you tied the knot this year (or plan to this month), it’s worthwhile evaluating what getting married will mean for your 2019 tax situation. While many couples will see their taxes drop, some will face a “marriage penalty” — paying more than if they had remained unmarried and filed as single taxpayers.
So, depending on your income, where you live and the deductions or credits you use, a bigger tax bill could be part of your married future.
“Marriage penalties exist for both high- and low-income couples, but are most common when two individuals with equal incomes marry,” said DeAnna D’Attilio, director at Acorn Tax Planning in Reston, Virginia.
Roughly 2.2 million marriages take place in the U.S. each year, according to government data. Most of them — 78% — occur between May and October, separate information from TheKnot.com shows.
While this year’s newlyweds generally won’t face a tax deadline until next April, the sooner you know what to expect, the more time you’ll have to plan accordingly. No matter when you get married during the year, you’ll be required to file your 2019 tax return next spring as a married couple. (Filing separate tax returns as a married couple rarely makes financial sense.)
For high earners, a bigger tax bill can come from a few different sources.
For starters, the top federal rate of 37% kicks in at taxable income of $510,300 for single filers in 2019. Yet for married couples, that rate gets applied to income of $612,350 and higher.
As an example: Two individuals who each have income of $500,000 would pay the second-highest rate, 35%, on their income if they filed as single taxpayers.
However, as a married couple with combined income of $1 million, they would pay 37% on $387,650 of that (the difference between their income and the $612,350 threshold for the highest rate). That would mean paying about $7,750 more in income taxes…..Read more>>