A taxpayer’s marital status for the entire year is determined as of Dec. 31. A taxpayer who gets married (or divorced) on or before that date is treated as if he were married (or single) all year long. You will be able to file a joint income tax return upon marriage Although this simplifies the filing process, you will more than likely discover that your tax bill is either higher or lower than the total of the two of you when you were single This section of tax law dates back to the days when the husband worked to suppport his wife and kids. With only one paycheck the situation was clear. An increase in the Exemptions and a different tax rate meant that the one-income family would pay less tax (because there were more mouths to feed). However, the wars of the 20th century brought women into the workforce and changed the situation. If your wife does not work then there is no marriage penalty Tax is higher when you file together, as more of your total of two incomes is taxed in the higher tax brackets. This is commonly known as the marriage tax penalty. In 2003, a tax law that intended to reduce the marriage penalty went into effect, but this law didn't get rid of the penalty for higher bracket taxpayers Once married, you may not file separately in an attempt to avoid the marriage penalty - Actually, filing as ‘married filing separately’ can raise your taxes For the optimal filing status for your situation you should discuss it with your tax advisor but read on for some more explanation from the IRS: THE MARRIAGE PENALTY or BENEFIT For those with incomes below $36,900 each (or $73,800 together), the marriage penalty doesn’t usually apply. For tax year 2014, the 15 percent tax bracket tops out at $36,900 in annual taxable income for single filers, while the upper limit is exactly twice that for married couples Penalty starts here (at approx $73k [together] ): Then things change - in the 25 percent tax bracket - for a single filer, this bracket ends at an income of $89,350. If you simply doubled that number to get the top amount for joint filers, you’d see $178,700 Unfortunately, that’s not how it works. In the 2014 tax year, the 25 percent tax bracket ends at $148,850 for married couples filing jointly so you are charged extra tax on $178,700 - $148,850 resulting in $1,492.50 extra tax. Thus, penalized (the marriage penalty) for their combined income. When marriage pays (below approx 73k [together] If you make $50,000 in taxable income and your partner makes $15,000 working part time, you benefit from marriage. As a single person, your $50,000 income would put you in the 25 percent bracket while your partner paid in the 15 percent bracket. Marriage, though, brings you down to the 15 percent bracket, since your combined income of $65,000 is within ranges As your incomes climb, the marriage penalty becomes more pronounced. Take the top tax bracket: As a single person, your income has to be at least $406,750 to reach the 39.6 percent level. If you are married filing jointly, you end up in the highest tax bracket when your combined income reaches at least $457,600. That’s a difference in income of $50,850 Higher brackets      Joint returns where income > $250,000 and      Single returns where income >  $125,000  together they are estimated to make up 3% of households next year In the  2% chancet of you and your partner earning as much as $300,000 a year each, filing individually would put you each of you  in the 33 percent bracket. File jointly, though, and now you’re in the 39.5 percent bracket. 3.9% of anything over $405,100 Don’t expect simpathy from most other taxpayers and the $16,000 extra tax may not mean very much to you at this level of earnings Other Penalties Other penalties include phase outs for certain credits and deductions. Phase outs for personal exemptions and itemized deductions in 2014 begin at $250,000 adjusted gross income for singles and $300,000 for joint filers You can see how the marriage penalty can impact your ability to reduce taxable income In addition, new taxes on investing and Medicare as a result of the Affordable Care Act impact married couples considered high earners, since the threshold is $200,000 for singles and $250,000 for joint filers So, if you and your partner both make $150,000, neither of you is subject to the new taxes as singles, but as joint filers you are subject to the new taxes (depending on how much of your income comes from wages versus investing) THE BOTTOM LINE: As you prepare to tie the knot, it makes sense to consider the tax implications of your marriage. In some cases, you can benefit with the married filing separately status. Filing separately doesn’t bring the brackets in line with single filers, though, and you have to figure out how to divide up your deductions Please do not be put off marriage because of the marriage penalty Of course you might like to consult a tax accountant to help you run the numbers to see whether or not filing separately would help you reduce the marriage tax penalty and obtain maximum advantage So if you are getting married: 1.   Congratulations 2.   Call Cliff at (949) 813-1349