I'm about to get married and my fiance makes twice what I make. How will that impact me tax-wise in CA?

Question

Is it better to file separately or jointly? Should I wait until next calendar year to legalize my marriage to avoid paying taxes this year?

Answer 1

First of all, CONGRATULATION! But there may be an increase of your taxes. It is known as "marriage penalty"!

(My old econ book- first page:
There are two ways to get rich:
1. Buy Low and Sale High
2. Marry one :)

When my clients do their tax returns with me, I refuse to answer these question: Should I get married? I always refer them to a marriage consular.

Put jokes on the side:

There are several issues involved! But right from the start, I can tell you Married Filling Joint would be better (99.9% other than high medical on one or real strange itemized deduction). Not only Married Filing Seperately will eliminate many of the credits.

Here are some exmaples:
http://www.irs.gov/faqs/faq-kw115.html

Remeber you are living in a community property state (see below*)! Everything is half and half. Maybe you would want half of his deduction but not half of his taxable income. In other words, you may endup paying more or same amount of taxes by filing seperate tax return. (By the way, you cannot take standard deduction while your spouse going itemized.)

Should I wait until next calendar year to legalize my marriage to avoid paying taxes this year?

Well! That I will refer you to a marriage consular.

Well! According to the IRS:

http://www.irs.gov/newsroom/article/0,,id=119092,00.html

The increase in the standard deduction for couples whose filing status is married filing jointly eliminates the so-called “marriage penalty.” The changes in tax rates will automatically be reflected in the tax rate tables. The IRS also urges military families to review tax law changes. Some changes will require military families to file amended returns to fully claim some retroactive tax relief.

So for the people who already itemized (prince charming buying you the new home and wait for you); that really sucks!!! Please write to our CA representatives WHY!

*Community or Separate Property and Income

http://www.irs.gov/publications/p555/ar02.html#d0e881

If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes. The following is a summary of the general rules.

Community property. Generally, community property is property:
That you, your spouse, or both acquire during your marriage while you and your spouse are domiciled in a community property state.

That you and your spouse agreed to convert from separate to community property.

That cannot be identified as separate property.


Community income. Generally, community income is income from:
Community property.

Salaries, wages, and other pay received for the services performed by you, your spouse, or both during your marriage.

Real estate that is treated as community property under the laws of the state where the property is located.




Separate property. Generally, separate property is:
Property that you or your spouse owned separately before your marriage.

Money earned while domiciled in a noncommunity property state.

Property that you or your spouse received separately as a gift or inheritance during your marriage.

Property that you or your spouse bought with separate funds, or acquired in exchange for separate property, during your marriage.

Property that you and your spouse converted from community property to separate property through an agreement valid under state law.

The part of property bought with separate funds, if part was bought with community funds and part with separate funds.


***Tax planning is important: Such as increase your withholding by changing your W-4 with your current employer. Increase 401k. Maybe go back to school (education credits). Buy a new home while the real estate is outrageously high (mortgage interest deduction). Have lots of baby (child tax credit, child care credit and personal exemptions)! Adopt more kids while you cannot afford the living in the state of CA (adoption credits).

By the way, there are other issues you may want to consider as well. For instance, do you want to change your name? If so, you will need to contact DMV and SSA. Just remember to do it prior to filing your tax return.

Remember to change your address with the IRS if you are not living together the previous year:

http://www.irs.gov/pub/irs-pdf/f8822.pdf

Answer 2

If you have no children and do not itemize, if you get married and file a separate return your taxes are going to be about the same as they were when you filed as single.

If you have children and are receiving the Earned Income Credit and/or Child Tax Credit, those credits may disappear after you get married.

By combining your incomes after you are married, your joint tax bracket may be higher than either of your tax brackets before, or it may be lower. It depends on the levels of your incomes. The higher income spouse will have the benefit of a larger standard deduction and an extra exemption. This offsets the increase in tax that the lower income spouse may pay.

No children: No reason to wait
Children: Loss of tax benefits, maybe want to wait.

Answer 3

wow wait to get married becuase of taxes are you sure you should be getting married?
I would think that would be way back on my list!
Well any ways suggestion, depending on when your getting married will determin how you will have to file.
I'm not sure of CA taxes but for fedreal taxes they usually want you to be married for 6 months out of the year to file togther.
Of course with two incomes your tax rate will go up!