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Marriage/Taxes Question

Old 08-17-06, 03:28 AM
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Marriage/Taxes Question

I'm getting married in a few days, and I'm trying to figure out how this will affect us both in the short-term and long-term when it comes to taxes. Here's the scenario.

We will both wind up, for various reasons, making right around the same amount of money we each did last year, and getting married (adding our incomes together) still keeps us in the same tax bracket, so we're not penalized there. Here are my questions.

#1.) Will we have less federal taxes taken out of our paychecks each week?
#2.) If so, how will this affect us when it comes time to file our return? Assuming EVERYTHING aside from our marriage to one another is the same, would we likely get more back? Less?

I know this is more than likely a common sense question, but any answers at all that can be provided would be greatly appreciated. Thanks!
Old 08-17-06, 08:07 AM
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If you are in the same tax bracket you will take a slight penalty, its got a cute name "The Marriage Tax". All things being equal (income and deduction wise) I believe there is a slight increase in tax amount you will pay. Of course this is my non-expert opinion. So #1 you will pay the same each week unless you change your withholdings, #2 You will get slightly less back. I would recomend you redo the calculation on the W-4 form, it will indicate the change in what you may owe taking into account both incomes.
Old 08-17-06, 08:07 AM
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The amount of taxes you have taken out is based on your W4 and the number of exemptions you claim. Nothing will change until yu change this.

Actually being married is a big tax penalty

http://www.savewealth.com/news/9905/...gepenalty.html

http://www.bankrate.com/brm/itax/tax.../20010209a.asp

http://marriage.about.com/od/finance...agepenalty.htm

Can't answer your second question without knowing more about your deductions, like mortgage interest and any other taxes etc.
Old 08-17-06, 08:25 AM
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As others have said, on withholding, nothing changes unless you change your W4. If married, it is harder to figure out the best way to fill out your W4's if both work.

As for the taxes, the only viable answer is "it depends." If one of you earns all or nearly all the money, total taxes will go down, because they'll pretend you each earned half, and the system is "progressive."

If the income is fairly evenly divided (you are both in same incremental tax bracket), it depends on the income. There is no marriage penalty in the 10% and 15 % tax brackets. or in the start of 25% bracket. The marriage penalty kicks in at the pop from 25% to 28% bracket. It occurs at a lower combined taxable income for MFJ, than the sum of two single filers at the peak of the 25% bracket. The marriage penalty exists and grows in all higher brackets. (There are also some unfairnesses in deduction phaseout, IRA limits, education deductions, AMT exemption and other aspects of the tax code for married filers. High income tax payers are better off living "in sin.")
Old 08-17-06, 09:26 AM
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don't do it!
Old 08-17-06, 09:46 AM
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Originally Posted by abrg923
I'm getting married in a few days, and I'm trying to figure out how this will affect us both in the short-term and long-term when it comes to taxes. Here's the scenario.

We will both wind up, for various reasons, making right around the same amount of money we each did last year, and getting married (adding our incomes together) still keeps us in the same tax bracket, so we're not penalized there. Here are my questions.

#1.) Will we have less federal taxes taken out of our paychecks each week?
#2.) If so, how will this affect us when it comes time to file our return? Assuming EVERYTHING aside from our marriage to one another is the same, would we likely get more back? Less?

I know this is more than likely a common sense question, but any answers at all that can be provided would be greatly appreciated. Thanks!
how much your refund is or how much you owe doesn't mean anything. you need to look at your tax liability for the year and learn to decrease it. there is a tax thread here every year if you want to search. Or there is a big one on fatwallet in the finance forum.

i can set up my withholding to leave me no money every month and then get $10,000 back in a refund. doesn't mean I'm doing the right thing,
Old 08-17-06, 10:22 AM
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Originally Posted by Lunatikk
don't do it!
Damn, beat me to it!
Old 08-17-06, 11:19 AM
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The Tax Relief Reconciliation Act of 2001 did a lot to remove the marriage penalty.

Luckily for you the relief was phased in, starting in 2005 and it grows yearly until 2010 when it was scheduled to end. The standard deduction was doubled for married people and the 15% tax bracket was expanded to tax a higher income at a lower rate.

There was another vote that made that tax cut permanent. Of course you can always vote for people who want to eliminate it if you think it's just a tax cut for the rich.
Old 08-17-06, 11:56 AM
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Originally Posted by X
The Tax Relief Reconciliation Act of 2001 did a lot to remove the marriage penalty.

Luckily for you the relief was phased in, starting in 2005 and it grows yearly until 2010 when it was scheduled to end. The standard deduction was doubled for married people and the 15% tax bracket was expanded to tax a higher income at a lower rate.

There was another vote that made that tax cut permanent. Of course you can always vote for people who want to eliminate it if you think it's just a tax cut for the rich.
It would be nice if the so-called "relief" actually did something. I have not seen any benefit at all.
Old 08-17-06, 12:03 PM
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Did you notice the "phased in" part? It's going to take a few years for the joint standard deduction to be fully equivalent to two people's standard deduction as well as the lower tax rate.

http://partners.financenter.com/hill...ge_penalty.fcs
Old 08-17-06, 12:16 PM
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If you check the "I'm gay" box I don't think they can tax your marriage. Just pray you don't get audited since they will require more than receipts.

Old 08-17-06, 12:49 PM
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Originally Posted by abrg923
I'm getting married in a few days, and I'm trying to figure out how this will affect us both in the short-term and long-term
....well, in the short term it will cost you some money, but if things don't go well, in the long term it will cost you 50% for YEARS.

-p
Old 08-17-06, 01:21 PM
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Originally Posted by X
Did you notice the "phased in" part? It's going to take a few years for the joint standard deduction to be fully equivalent to two people's standard deduction as well as the lower tax rate.

http://partners.financenter.com/hill...ge_penalty.fcs
Then I suppose I will reserve judgement.

My guess is that the phase in will be offset by salary increases and other taxes so that in 5 years I will be paying roughly the same % of taxes that I am now.
Old 08-17-06, 01:48 PM
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Originally Posted by Brian Shannon
Then I suppose I will reserve judgement.

My guess is that the phase in will be offset by salary increases and other taxes so that in 5 years I will be paying roughly the same % of taxes that I am now.
That is the horror of inflation too. You get paid more and can buy the same amount of stuff but your tax bracket increases.

I can't remember if they did anything to index taxes to the inflation rate or now. Probably not.

But look at it this way, after a few years people can hate you and want to tax you even more because you'll be called rich.
Old 08-17-06, 03:14 PM
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So I can continue to leave my W-4 under single status (having more taxes taken out)? I wasn't sure if you could even do that, since you're legally married, but are claiming single on your W-4. Would I need to change it at the beginning of the year if so?
Old 08-17-06, 03:54 PM
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Originally Posted by abrg923
So I can continue to leave my W-4 under single status (having more taxes taken out)? I wasn't sure if you could even do that, since you're legally married, but are claiming single on your W-4. Would I need to change it at the beginning of the year if so?

At my workplace, they give us the option of witholding at a single rate if we're married and both spouses work. You can also use the IRS witholding calculator:

http://www.irs.gov/individuals/artic...=96196,00.html
Old 08-17-06, 11:18 PM
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Originally Posted by fujishig
At my workplace, they give us the option of witholding at a single rate if we're married and both spouses work. You can also use the IRS witholding calculator:

http://www.irs.gov/individuals/artic...=96196,00.html
But regardless, I would still have to change my W-4 form to indicate that I am indeed married, correct?
Old 08-19-06, 02:38 PM
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Originally Posted by abrg923
But regardless, I would still have to change my W-4 form to indicate that I am indeed married, correct?
You dont have to change it. The only risk is that if you dont withhold enough and you end up oweing a bunch you can be penalized for not making payments up front. Low risk though you tax situation wont be drastically changing.

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