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Marriage Tax Benefit Pros and Cons

Individuals are considered married if they are legally married as of the last day of the tax year. So, if you get married on December 31st, the IRS considers you married for the full year.

That does not mean you have to, or should file your tax returns together. You have two options: married filing separately or married filing jointly. Depending upon your personal situation, choosing separate or joint filing can be to your tax advantage or disadvantage.

Joint filing is the most commonly used filing method for married couples. Here is why:

• It’s easier because it means filing one federal tax return instead of two.
•  You are eligible for credits, such as those for education and dependent care expenses.
• You have a lower tax liability if there is disparity in the two incomes.

The main appeal for joint filing is rates for married individuals are generally lower than those for married filing separately or even single, unmarried taxpayers.

Filing separately may be advantageous if one spouse owes money to the I.R.S. and the other is due a refund. Separate filing also may save you taxes if one spouse has significant medical expenses, casualty losses or miscellaneous deductions that must meet a percentage-of-income threshold before they can be claimed.

If you file as married filing separately, adverse tax implications include:

• You may not be eligible for certain credits, including the earned income credit and education credits.
• A non-working spouse won’t be able to contribute to an IRA.
• Don’t forget about state taxes. You may get a federal refund but owe a lot in state taxes.

Remember that a husband and wife filing separate returns must use the same method of claiming deductions. If one itemizes, they both must itemize.

About half of the couples who file jointly end up paying what is popularly called the “marriage tax penalty”.

This tends to happen when both spouses earn roughly the same amount of income. In these cases, they tend to pay more than they would have if they were unmarried and filing as single taxpayers. Also, a couple’s combined income can push them into a higher tax bracket on a joint return.

Tax law changes have alleviated the marriage tax penalty somewhat.

In 2004, President Bush signed the Working Families Tax Relief Act into law. The bill includes an extension of the “Marriage Tax Relief provision” that is supposed to save married couples more than $1,700 annually.

If you plan to get married at the end of the year, compare the amount of tax you’ll pay as two single taxpayers with the amount you’ll pay as a married couple. In some situations, the tax on a joint return is higher than it would be on two single returns. The closer the spouses’ incomes, the larger the marriage penalty can be. Your tax professional can help in understanding how the marriage penalty might affect you.

Gus Moore heads up Miami Beach 411 as site administrator. You can reach him at 1-305-754-2206.

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3 Responses to "Marriage Tax Benefit Pros and Cons"

    Jen says:

    What is the minimum income per year for married couples to file taxes? What is the minimun per year if you file single?


    Posted on 11/21 at 8:53 PM
    Jen says:

    Thank you…this is helpful information, however, I was wondering the actual minimum dollar amount that has to be made yearly for us as a couple…or as individuals…for an example last year I did not make enough to even do my taxes…what is the minimum amount yearly…Thank you!!! Jen


    Posted on 12/22 at 9:42 PM
Patricia Strickland says:

My ex-husband owes taxes. We filed together so no I am liable for his tax burden. I am remarrying and don’t want my future spouse to be responsible for this. What do I need to do to ensure he will not owe because of my burden?


Posted on 02/22 at 1:09 PM

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