How Come You Pay More Tax if You Get Married?

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marriage_penalty_taxGet married and pay more taxes. Sad, but true in a lot of cases.

Here’s what happened:

Question: My partner and I have been together in California for almost 11 years and own a house and an income property together. I am retired, collecting SS and a small pension. She is still working. We were thinking of getting married, but when I do our taxes as married filing jointly, we end up owing $2000 more than each of us filing single. In fact we normally get a refund filing single. Is it worth it for other reasons or am I missing something that would lower our joint filing? Is there a penalty for being married?

Answer: If two partners earn roughly the same amount of money, they will get kicked into a higher tax practice if they marry. What if you’re married and don’t want to file together? The only thing worse for two income-earning spouses that file jointly is if they file separately. You pay at the same tax rate as if you filed together plus you lose some advantages such as the real estate professional status.

The only time you’ll actually pay less tax is if one spouse makes a lot more money and the other make little to no money. The high income spouse will pick up a deduction and the low income spouse doesn’t lose anything because he or she probably didn’t pay any taxes to begin with.

The marriage penalty is real. The solution is to either not get married or find other strategies that reduce your taxes despite the additional penalty you just picked up.

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