Married People in Arizona Having to Pay More Taxes
Filing Joint Taxes Leads to Paying More Taxes
First date, sparks, romance, commitment, true love, taxes. Taxes? How incredibly UNromantic. The new tax increases have some couples choosing not to get married based upon the penalty they will face when it comes time to file jointly and pay higher taxes simply because they are married.
Tax increases will effect married couples faster than individuals, as taxpayers with more than $200,000/yr income will see the rise in federal tax rates on wages and investments. It seems that married people who are working and earning two decent wages are being penalized. Ah, two hearts joined as one. And two incomes jointly assessed. Doesn’t seem quite right that 2 (probably well-educated) individuals who choose to both work should be penalized for working hard and making a good living, however, that is the situation facing many couples in Arizona and throughout the United States.
How tying the knot can affect your taxes:
Your filing status will change once you are no longer single. Married filing jointly or married filing separately are two statuses that may be filed as a couple. Know what your filing options are, and which will provide the most beneficial tax outcome. Confused by these choices or which choice may be the best for your situation? If so, you should contact an experienced tax attorney or tax preparer and find out what options are available to you.
Your tax bracket will be different when you’re married and filing jointly, as your income is combined, so your income may not be taxed at the same rate as when you were single. The combined income may even bump you into a higher tax bracket. Ah, the price of being married!
Your last name may change, but your Social Security number will not. The IRS must get the information about the name change before you can file your return. To avoid any complications with the IRS, complete the name change process before filing taxes, so the name on the return matches that on file with the Social Security Administration.
Your tax withholding. Consider changing your W-4. It may behoove you to change this form with your employer and claim additional allowance or change the amount of withholding because of the higher standard deduction you may claim on a joint tax return. No, your employer is not responsible to change your withholding preference, nor are they going to make the proper changes when you get married.
Home ownership. Maybe you are going to buy a home as a married couple or you need to sell one or two homes before getting married. Both buying your first home or selling one have tax implications.
Standard deductions. You need to determine if it is more advantageous to itemize or claim the standard deduction. When filing as a couple, find out which is more beneficial ; which will result in a higher total deductible amount.
Estate planning. Get your estate plan redone once you get hitched. Spouses may give unlimited gifts of property or cash without gift taxes. So for estate planning purposes, this gift tax provision has a significant connection.
It has been said that couples that are keen on every aspect of the idea of saying “I do!” are actually not going through with the nuptials due to the extra dough they have to pay in taxes due to those 2 little words. The additional taxes taken from a couple combined with a poor economy could quite possibly leave many married Arizona couples in a dire financial situation. Financial difficulties can lead to a myriad of different undesirable situations such as: repossession, foreclosure, wage garnishment, and even bankruptcy.
Before you walk down the aisle, it may be beneficial to lay out a budget for yourself and your special someone and actually find out if the additional tax hit is applicable to your situation. You can also determine if the savings that you would gain by staying single and simply living together is worth listening to family and friends repeatedly asking you “when are you going to get married?” The choice is yours, good luck!
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