Can you Reduce your Taxes by Filing Married?

After a couple gets married, one of the common questions is whether they will able to get any tax benefits from filing married jointly rather than separately. As is the case with most things tax-related, it depends on the individual situation. There are some cases where filing jointly will produce a lower total tax, but many couples will still run into what is commonly known as the marriage penalty. However, many changes have been made to reduce or eliminate this so-called penalty. To learn more about whether the marriage penalty will be present in a specific case, a closer look at the tax policies is needed.

The main issue that causes the marriage penalty is that a couple reports their income together, which means that they are often elevated into a higher tax bracket if both have jobs or other sources of income. Prior to 2010, the tax rates for married couples were more than double than if they were filing as single individuals. However, this has changed due to new laws and some brackets have been adjusted to meet this problem. For the 10% and 15% brackets, the totals now match, meaning that single and married filers will have the same rates. This same adjustment has not been seen in higher tax brackets and couples that fall into these categories may still see a marriage penalty.

The way to figure out if a couple will get a penalty or a reduction in their taxes is to look at their individual incomes. If they are relatively the same, it is likely that they will pay more in taxes. On the other hand, if they are substantially different, the opposite can happen – the couple can actually end up paying lower taxes. This is because the lower income of one partner brings down the average, meaning that the tax is figured for both on a lower bracket.

There is an urban myth that most couples can get around paying higher taxes by filing married separately. The idea is that one spouse will use the standard deduction and the other will itemize their deductions. The IRS requires that married couples file using the same method of deductions, regardless of whether they file together or separately.

To find out if filing married will turn out in higher or lower taxes, the best option is to visit a local tax professional. The expert will be able to investigate the particular situation and calculate which tax brackets will be used if the couple files together. The tax professional will be able to look at other factors that may be involved, such as the selling of one home due to the marriage, to determine the best way for the couple to file. In essence, the answer to the question is maybe – married couples may be able to reduce their taxes by filing married, but it is only in some cases, but others will find that their new marital status actually increases how much has to be paid.

Have a tax question? Ask one of our tax professionals.