How to Avoid the IRS “Marriage Penalty”

Summer marks the busiest season for weddings. During this time, couples are busy receiving advice form of variety of sources – wedding planners, caterers, and even tax lawyers?

For those of you waiting to tie the knot in fear of paying higher taxes as a married couple than if you were single, the so called “marriage penalty,” there are probably worse problems you have to worry about.

However, marriage certainly does entail numerous financial consequences, some good and bad. Several of these problems involve the dilemma regarding whether to file income taxes together as a couple or separately. Although your loyal IRS tax attorney can assist in sorting through these issues, here are some ramifications to sort through.

Progressive taxation means that as your income increases, the additional income gets taxed at increasingly higher rates. There are six federal tax rates ranging from 10% for low-income families/individuals to 35% for earnings over $388,350 a year.

The marriage penalty occurs when couples file a joint return and end up paying higher income tax than if they were to remain single. Here are some examples:

– If you have only a single household income or one spouse makes significantly more than the other, you normally receive a “marriage bonus.” This means that your combined income is taxed at a lower rate than if the higher earner were paying taxes as a single person.

– For those couples who enter the higher end of the tax bracket, the disproportion between filing as a couple or as a single person becomes more evident, more prominently if you earn amounts similar to one another or are both highly paid. A single person with $75,000 in taxable income would fall in the 25% bracket, while a married couple with a combined taxable income of $150,000 would bump up to the 28% bracket.

So for those of you still thinking marriage would be a financial disadvantage, here is what to keep in mind. Married couples are eligible for various tax breaks and benefits that would help compensate for a higher income tax that an IRS tax attorney may be able to assist you understanding and utilizing. Some of these include:

– Medical coverage through a spouse’s employer. Monthly premiums are not considered taxable incomes for couples as they would be for unmarried domestic partners.

– A spouse can pay for medical expenses on a pretax basis with a flexible spending account.

– One is entitled to 50% of a spouse’s Social Security benefits while he or she is alive, which can also be collected following death if it exceeds your own. This also includes a $255 spousal death benefit.

– If one dies without a will, the spouse automatically inherits he estate, tax-free. All others who are not spouses must pay taxes on estates valued over $5.12 million.

– Finally, if you are considering filing under the “married, filing separately” option instead of jointly, you will forfeit numerous tax credits and deductions available only to joint filers. These include the Earned Income Tax Credit, the tax credit for child and dependent care expenses, and deductions for tuitions, fees, and student loan interest. Additionally, the IRS states that one must either claim the standard deduction or itemize deductions.

If tax fears are postponing wedding plans, a tax lawyer can ease the tension and prevent any tax raise. Prevent the “marriage penalty” by contacting an IRS tax lawyer for assistance. Who knew that a tax lawyer could be a valuable addition to your wedding party?


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

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