Marriage will change your life, but in some ways it doesn't change your tax return much. As a single, you get a standard deduction of $5,950, as of 2012; when filing a joint return you deduct $11,900, the same as two single deductions. In other ways, however, marriage can have a massive impact on your 1040.
If you're single with net taxable income of, say, $40,000 a year, you pay a 25 percent tax rate on almost $5,000 of your money. On a joint return, everything is in the 15 percent tax bracket. Tax brackets are more favorable for joint returns: If you marry and you're the sole wage-earner, there's a good chance you'll pay less tax. If you both work, however, your combined incomes may push you into a high-enough tax bracket that you end up paying more tax. If you're married but file separately, the rates for high incomes are slightly worse than for singles.
Some tax write-offs are limited by your adjusted gross income. With medical expenses, for instance, you subtract 7.5 percent of your AGI from your medical expenses before deducting them. If you're a two-income, joint-return family, you have a higher AGI than if you filed alone. As a result, you get a smaller deduction. Some deductions work out better for married couples, though. You can only contribute $5,000 to your IRA in a year, but if your spouse doesn't work, you can put another $5,000 into an IRA for him.
Married Filing Separately
Although most married taxpayers benefit from filing jointly, there are times filing separate married returns works out well. If one of you has a lot of medical deductions, you can write off more of your expenses if you only subtract 7.5 percent of one spouse's AGI. It also protects you from liability if you think your spouse cuts too many corners on her return. Married filing separately has some significant disadvantages, however. You can't take the earned income tax credit, the adoption-expense tax credit or education credits, for example. Some deductions are either denied you -- student-loan interest, for example -- or sharply reduced.
Alternative Minimum Tax
Congress created the Alternative Minimum Tax to make sure that high-income taxpayers -- who were using lots of deductions to wipe out their tax bills -- paid some income tax. It isn't inflation-adjusted, so it now snares lots of Americans who don't consider themselves "high income." You can exempt some of your money from the tax, which is one area where marriage gives you a worse deal. In 2011, for example, single filers could exempt $48,450 from tax, whereas married couples filing jointly could exempt only $74,450.
- CBiz: IRS Releases Official 2012 Tax Rate Brackets ...
- MSN Money: Seven Tax Reasons Not to Get Married
- Internal Revenue Service: Traditional IRAs
- IRS: Exemptions, Standard Deduction and Filing Information
- CNN: Understanding the Alternative Minimum Tax (AMT)
- Nolo: Understanding the Alternative Minimum Tax
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