30 Jan The Marriage Misconception
Anyone who is, or has been, married knows that marriage is not a walk in the park. In fact, if you type “marriage is” in a Google search, you will find that Mr. G will suggest that marriage “isn’t for you,” “isn’t for me,” and is “hard.” Try it out, seriously. There are a lot of misconceptions about marriage, such as the belief that it should be easy, that it will magically make you happier and will be played out like a Hollywood fairytale. That is not to say that you can’t have a magically happy, fairytale-esque marriage, but it doesn’t come without its fair share of hard work and dedication. Unfortunately, the tax considerations of marriage aren’t any easier… or less complicated. I often get a very dumbfounded look when I tell a newly married couple that instead of getting the refunds they are accustomed to as a single person, they actually owe money this time around. “How could this possibly be?” they ask. “We thought marriage was supposed to produce tax benefits! This has to be wrong!” Nope, not wrong. The answer that most people don’t like to hear with this topic (or any tax topic) is that, “it depends.” Thus, I feel compelled to expose the most common misconception of marrying your tax returns:
“Marriage entitles us to tax breaks”
It depends. Are you and your spouse both high earners? Then the answer is probably no. In fact, you could actually have just the opposite happen, in what us tax nerds call the “Marriage Penalty.” Yes, it’s true. Two high earning individuals often pay more in tax married than they would if they were single. Many same-sex couples found this out when they were allowed to amend previous federal income tax returns to file jointly with their spouse, only to find that they actually would owe a significant amount of money if they did so. If only one spouse works, then yes, you will receive a tax break by virtue of filing jointly as a married couple. This is where the misconception is born, in the assumption that what saved your neighbors’ tax dollars will do the same for you.
Another thing to keep in mind is that if you get married towards the end of the year, you will file your tax return as if you’d been married the whole year. So this means that the timing of your marriage is important. Getting married December 31st vs January 1st will definitely impact your tax bill. While we’re not in the business of instructing our clients when to get married (or whether to get married!), we do feel like you should at least understand the implications to your tax situation.
Sharing a bathroom and sharing a tax return both come with their own messes and complications. Thankfully, there are professionals to help you with the latter.