Jake is marrying Tara. Everyone of the 200 guests await those familiar sounds from a church organ that we all know so well. The reception is a blast. Food is delicious. It should be considering it was $150 a plate. But cheap cousin Angus only gives 30 bucks inside a wrinkled envelope. Why thank you!
Jake and Tara don’t let that bother them. This is a happy time and no one will spoil it. Or so they think. Then comes along Uncle Sam who wants to take money out of those lovely envelopes and put it right in his pocket. There is talk in the air of a marriage penalty. Uh oh. Here are 4 items of concern for married couples pertaining to their taxes.
1. The marriage penalty. Jake and Tara have changed nothing regarding their employment. Income is the same. Withholding is the same. Everything is the same. They filed as single up until now. They both received refunds up until now. Now all of a sudden their refunds have been wiped out. And look at this! Tax Balance Due?! This can occur when the combined income of both Jake and Tara pushes them into a higher bracket therefore increasing their tax liability.
2. We’re in this together. This sounds sweet, how could “in this together” be a bad thing? Both Jake’s and Tara’s signatures are required on the tax return. If Jake decides to fluff some numbers, Tara is liable for those numbers as well. Both spouses are equally liable for the return. If the IRS comes a-knockin’ Jake and Tara are both in deep doodoo. So not fair. Tara had nothing to do with the fluffing of the numbers. But they are in this together.
3. Takes more for deductions to kick in. Deductions kick in when they reach a certain percentage of your adjusted gross income. For example, medical deductions must reach 10% of your adjusted gross income before they begin having an effect on your tax liability. So the combined incomes of Jake and Tara may make it more difficult for medical expenses and miscellaneous expenses to kick in.
4. Refund blockage. Tara has a defaulted student loan. Jake met Tara years after she graduated. The newly married couple can have their refund blocked, swiped, delayed etc. because of that student loan. Same applies to unpaid child support.
Alright, I’m speaking now and not forever holding my peace. Screw this call the whole thing off. I want out. Right? Wrong. The good news about all of this is many of these drawbacks only occur in certain scenarios. Tara is in love with Jake. Jake is in love with Tara. So in the end, it’s all worth it. Check back lovebirds, their will be more to this marriage segment.