Post # 1
I just have to vent. Sorry this is so long.
I ran the numbers and found that me and FI would owe an extra $7-9K per year – once legally married!! Totally shocked us to the point that we are wondering what the is the benefit of paying almost $10K per year for a piece of paper!!!
No house, no kids, no health insurance savings, no additional job benefits …. the only thing I can think of is trouble in the hospital if either one of us was incapacitated. But, we can set that up legally now. I figure as long as we make wills and make each other the beneficiaries for everything, then there won’t be any difference.
There seems to be no way around it except to reduce your W-2 income – i.e. earn more of your money through investments. Or, start your own business – which is a huge tax shelter.
We’re definitely having our “wedding” but we may wait to get legally married when we’re about to have kids.
We’ve felt married in each other’s hearts for the past 2 yrs. We’ve already said our vows to each other. Our wedding is just so our families and friends can celebrate our happiness with us.
Anybody else consider not getting legally married because of the penalty?
Anybody know how to avoid the penalty?
Post # 3
Because I don’t know enough about these things, and because I live in the UK I am unable to help with specifics.
However, regarding your concern if one of you goes into hospital. Can you get Power of Attorney? You for him and him for you. Then if, god forbid, it came to it, you’d be able to make decisions on his behalf and vice versa.
Post # 4
Ha – I wish I’d thought of that! Just filed our first tax return as Married and it was PAINFUL! No way around it, it is ridiculous that they penalize a dual income household for being married, I think its discriminatory!
Post # 5
@ladyartichoke: Exactly. I’m sure we can do this.
Post # 6
@reebee: And what really sucks is that even if you get married on Dec 30, the irs considers you married for the WHOLE YEAR. So, not only did you just spend $20+ on the actual wedding day, but the next year you will begin to owe all this money – for the rest of your high income years.
Post # 7
I feel like this would be cheating the system. Theres a reason those taxes are in place, and takes from other people who also had to do this go towards things that you use every day.
Can you crunch the numbers again? This seems like a lot. I though you get a ton of tax CUTS when your married?
Post # 8
That totally sucks. We had the opposite happen with our taxes. We owed way less this year filing married than we did last year, filing separately. Nothing else changed.
Post # 9
Oddly, I ran our taxes as being married and I think we came out ahead, lol.
Perhaps talk to a financial advisor…maybe you can contribute more to a 401k or IRA and duce your taxable income?
Post # 10
Agreed, I thought you got a lot of benefits from tax cuts, I’ve never heard of a penalty for getting married! And I would not not get married because of taxes, it just is what it is. Taxes are an unavoidable necessary evil.
I’m interested to hear what someone knowledgeable about taxes says?
Post # 11
Post # 12
@teabiscuit: The tax rates generally benefit married couples where one spouse doesn’t work or makes significantly less than the other. I’m sure it was thought of as a benefit 50 years ago when women stayed at home, but these days it’s a penalty for most… I can assure you that my DH and I are using no more government benefits or services than we were the day before we got married, if anything the government is cheating us, not the other way around…
Post # 13
@ShortnSweet: We’re in the same boat. Beginning our first pay period in January, FH and I EACH began having an extra $50/week withheld from our paychecks because of all the money we’d owe at the end of the year due to the tax penalty.
If there’s no legal reason to do so, then don’t. For us, it was important, but we feel married regardless. We work for the same employer, and have excellent health care. There is no legal benefit.
@teabiscuit: You save money if you have different incomes; if your incomes are very similar and over a certain amount, that’s when you get the tax penalty. It’s not an explicit tax penalty that’s added onto your taxes, it’s just that the numbers don’t work out in the favor of a small percentage of couples.
Post # 14
We come out ahead too, since I am a student and not working. I don’t put a lot of stock in the government saying I’m married, but I would probably still get married regardless of the financial implications because there are legal implications to being married. What if something happens to one of you, but you were never legally married? I wouldn’t want to worry about that.
Post # 15
@teabiscuit: The problem is that the marriage penalty was removed for lower income couples, but when you make more than $137K together – you are penalized and lose a lot of deductions and credits.
It may sound like a lot of money but when you live near NYC your income is higher because the cost of living is outrageous.
We won’t even qualify for ROTH IRAs anymore because of our incomes.
Do you feel like the top 1% are cheating? They take advantage of tax loopholes. We’d be taking advantage of a tax loophole – people who live together but are not married. We’re paying plenty taxes single already. Plus by paying my $1000/month in Federal student loans I’m helping fund loans for other students.
Post # 16
Oh, and for more info on how to see if you’d incur the tax penalty, check out the thread I posted earlier this year: http://boards.weddingbee.com/topic/tax-tip-all-brides-getting-married-in-2012