Will Wedding Bells Mean Higher Tax Bills?

Getting married is a joyous occasion, one that we celebrate and look forward to for a large chunk of  our lives. On the flipside, though, marriage can also, unfortunately, bring higher taxes. Whatever the reasons, tax law tends to favor single filers, so, after your nuptials, don’t be surprised if you notice an increase in your tax bill. The good news is that, with a skilled accountant on your side, you can avoid some common tax penalties that affect the newly married, but the fact of the matter is, you likely will fall victim to at least some of the following tax penalties that can affect married couples.

Tax Bracket Penalties   

You probably already know that, the higher the tax bracket you fall into, the more money you will have to pay in taxes. What you might not realize, however, is that, even though, when filing jointly, you’re now filing two incomes instead of one, you don’t get to double your income without penalty.

Sadly, while the highest tax bracket threshold for single filers is $413,201, the threshold for married couples is only slightly more: $464,851. If you don’t fall within this high tax bracket, you don’t have TOO much to worry about, but, if you do, then you might find yourself paying a lot more in taxes than before you were married unless you work around the rules, in a legal way, with your accountant.

Child Tax Credit Penalties

Having children can often mean that you get cut a nice tax break when filing time rolls around, but, unfortunately, married couples can sometimes have a hard time getting this credit. While singles can get it in full as long as they’re not making more than $75,000 per year, married couples don’t get to double that limit. They can only make less than $110,000 and still qualify for the full credit.

IRA Deductions

Finally, if you’re rocking a traditional IRA during your single years, you’ll be glad to find that you can deduct your full contributions up to $61,000. And, as is the case with the other items discussed here, you won’t get to double that when you get married. Instead, your limit will only increase by about 60%- $98,000.

While it may not seem fair that tax law tends to favor the singles, this is NOT a good enough reason not to get married. Instead, it just means that, before you say, “I Do,” you need to speak with your accountant and see what you can do to wreak the least havoc on your taxes after the big day.