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My husband and I were married on December 1^st.  We chose that date for sentimental reasons; my grandparents were married on December 1^st, and they enjoyed a loving marriage for just shy of 64 years when my grandfather passed away.  While we were engaged, I mentioned our wedding date to an acquaintance and she tsked and said, “That is not a good wedding date for your taxes.”  At the time I did not know what she meant, but now I do.  When you decide to marry and how much income each party brings to the marriage can have a significant impact on your tax return, either as a marriage penalty or as a marriage bonus.

In the eyes of the IRS, whether you are married January 1^st or December 31^st, you are considered married for the entire year.  That means you must decide whether you would like to file your taxes jointly or separately.  The majority of couples file jointly.

Marriage Bonus

If you file jointly, you must take a close look at the income each individual is making.  Consider couple A—Mark and Susan.  Mark is making $90,000 and the Susan is making $15,000; the person making more money, in this case Mark, will experience the marriage bonus.  For 2010, the 28% income tax bracket begins after $82,400 for a single filer; however, when filing jointly, the 28% income tax does not begin until $137,300.  In this case, filing jointly will save Mark from having to pay at the 28% income bracket because filing jointly, the couple makes $105,000, which is well short of the $137,300 allowed.  In this case, Mark benefits from the marriage bonus.  In my husband’s and my case, my acquaintance’s concerns for us were unfounded as we had so little income when we were married that we suffered no ill effects from filing jointly.

Marriage Tax

On the flip side, consider couple B—Joe and Megan.  They both make $82,000, just shy of the 28% tax bracket.  As single filers, they wouldn’t pay any more than 25% on taxes, but when they file jointly, their income is now $164,000, $26,700 more than is allowed to stay under the 28% tax bracket.  As such, they are penalized with an $801 marriage penalty.  This can be a painful burden, especially if you celebrate a New Year’s Eve wedding and are only married for a matter of hours before the new year begins.

While couple’s with a higher income may face a marriage tax, it is often worthwhile to still file jointly.  If you file separately, you lose child care credits and two higher education credits.  In addition, you cannot claim deductions for student loan interest.  These credits alone may help offset the marriage penalty tax, if you face it, especially if you are married in your twenties and are a recent college graduate with student loan debt.

All things being equal, if you are going to face a marriage penalty tax at tax season and you are not sentimental, maybe you would like to marry earlier in the year rather than later to make those taxes more worthwhile.

Image Source: tomhoganlaw.com

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About Melissa Batai

Melissa is a freelance writer and mom to three children ages 7, 2 and 1. She blogs at Mom's Plans where she shares how her family is learning to live a fulfilling life on less.