If you are recently married, you’ll have to contend with a few more issues besides your spouse’s snoring! You’ll also have to deal with new tax choices, including decisions concerning how to file your taxes and whether you will file “married filing jointly” or “married filing separately”.
Combining two spousal income often equates to a higher household taxable income, than it obviously would have if you remained single. In a number of cases, this means more taxes you’ll have to pay, in part, due to the “marriage penalty tax”.
The marriage penalty is caused by our progressive tax structure, which puts the taxpayer in a higher tax bracket as their earnings increase.
Whenever both working spouses have to pay a higher combined, or “joint” tax rate on the identical income than they would be paying had they each been single, that’s generally when the marriage penalty kicks in.
Filing as married filing separately will also vary depending on whether you live in a community or separate property state.
The good news is that not all married couples have to deal with the marriage penalty. In some cases, some married couples pay less taxes together than when they were both single.
If you have any questions about the marriage penalty, please contact Bassim Michael at bmichael@bmichaelcpa.com.