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Choosing Your Tax Filing Status: Married Filing Jointly vs. Separately

February 03, 2015

Newly married? Learn the difference between filing statuses and how they can impact your taxes.

If you are newly married, it’s time to decide what your tax filing status will be. You could encounter what is known as a marriage penalty; paying more income tax by filing jointly than you would have if you remained single and filed as single filer. On the other hand, couples may get a marriage bonus; paying less income tax by filing jointly.

Newlywed filing options include:

  • married filing jointly
  • married filing separate

Married filing separate almost always results in more taxes because the brackets are not in line with the single brackets and couples will need to divide all of their deductions.

When filing jointly, couples are considered one taxable unit. In other words, your income and deductions are taxed as a household.

The marriage penalty often occurs when both spouses have similar incomes and are considered high earners. In looking at the IRS’s tax brackets for 2014 below, you will notice that the brackets for married filing jointly are not double that of single filers for all income ranges. Combining both spouses income could potentially push you into a higher tax bracket.

2014 Income Tax Brackets and Rates Single Filers Married Filing Jointly Married Filing Separately
Rate Taxable Income Range Taxable Income Range Taxable Income Range
10 percent $0 to $9,075 $0 to $18,150 $0 to $9,075
15 percent $9,076 to $36,900 $18,151 to $73,800 $9,076 to $36,900
25 percent $36,901 to $89,350 $73,801 to $148,850 $36,901 to $74,425
28 percent $89,351 to $186,350 $148,851 to $226,850 $74,426 to $113,425
33 percent $186,351 to $405,100 $226,851 to $405,100 $113,426 to $202,550
35 percent $405,101 to $406,750 $405,101 to $457,600 $202,551 to $228,800
39.6 percent More than $406,750 More than $457,600 More than $228,800

Married couples whose earnings are relatively similar really feel the pain of the marriage penalty as their earnings increase. For example, if each spouse makes $250,000 a year, they would each be in the 33 percent bracket if they were single. However, since the options for married couples are only married filing separately or married filing jointly, they will be in the 39.6 percent bracket with either filing status.

Another factor for the marriage penalty is phase outs for certain credits and deductions. Very often, income limitations for credits and deductions are not double the single amount for joint filers. For example, the phase out for personal exemptions and itemized deductions in 2014 begins at $250,000 adjusted gross income for singles and $300,000 for joint filers. By combining income, couples may find they are subject to phase outs that they would not have been when filing as single.

A marriage bonus comes into play when a married couple has a lower combined income. This happens because the 10 percent and 15 percent brackets are exactly twice for married couples than for single filers. When one spouse earns more than the other, the combined income could be taxed in a lower bracket jointly than it would have if you filed as a single. If one spouse makes $60,000 and the other earns $10,000, the total income, $70,000 is taxed in the 15 percent bracket. However if they filed single, the higher earner would have been taxed in the 25 percent bracket.

Your tax filing status is probably the last thing on your mind as newlyweds but it is important to be aware of the different options and how your new partnership will affect your taxes!

If you’re interested in seeing if you are subject to the marriage penalty, the Tax Policy Center has a great Marriage Bonus and Penalty Tax Calculator.

Questions? Contact us.

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