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The Marriage Penalty

Although President Obama promises taxes will be lower for 95% of taxpayers, a question I get from time to time is, “Can I save taxes by getting a divorce and just living together?”

Many two-income family taxpayers pay more taxes as a married couple than they would by filing separate tax returns as single individuals.  That’s called the marriage penalty.

The answer is you might save a little bit on taxes, but how much will a divorce cost you, both in terms of dollars and the good will of your spouse?

First, Congress has eliminated the marriage penalty for married couples making less than $132,000 and roughly equal incomes.

If a married couple earns $150,000, with equal incomes and a standard deduction, the marriage penalty is $500.

If they earn $200,000 under the same circumstances, they will pay a marriage penalty of about $787.

And there are other financial benefits to staying married, including inheritance taxes, insurance and Social Security, that you would lose if you got a divorce.  Finally, if you divorce in one year and remarry in the next, the IRS may disregard the divorce and require you to file as married anyway.

Source:  Post by Sue Shellenbarger

2 replies
  1. Lawyers in York
    Lawyers in York says:


    There’s no question that the marriage penalty pains many dual-earner couples. Although Congress has taken steps to reduce it, many middle- and upper-income married couples still pay more than they would if each partner filed separately as a single person.

  2. Small Business Tax Guru
    Small Business Tax Guru says:

    I’ve been included in taxations for lengthier then I care to admit, both on the individual side (all my employed life history!!) and from a legal viewpoint since satisfying the bar and pursuing tax law. I’ve put up a lot of advice and redressed a lot of wrongs, and I must say that what you’ve put up makes utter sense. Please persist in the good work – the more people know the better they’ll be armed to comprehend with the tax man, and that’s what it’s all about.

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