Will two single retirees pay more in Federal Income tax it they get married?

Question

We both make about 45,000.00 total from Social security and other pensions and investments.

Answer 1

Probably not. For a single person for 2007 the 25% bracket begins with taxable income of $31,850 and you are more than likely in that bracket. It goes up to $77,100, which you are under. For married filing jointly the 25% bracket begins with taxable income of $63,700 and continues up to $128,500, which your joint income would probably fall within. The only problems I could see is if you both itemized, which by getting married you would probably only be living in one house and therefore not paying Real Estate Taxes on two residences or mortgage interest if you still had a mortgage. So you might have less in itemized deductions. Also if you are both over 65, for 2007 you each get an additional deduction added to your standard deduction of $1,300, which would drop to $1,050 each if you got married. Those are about the only financial pitfalls I can see without knowing more of your financial picture. But to me, those are minor issues. The main issue to me is if you truly care about each other and want to spend what time you have left on the earth together, than the minor money matters shouldn't matter.

Answer 2

Probably. The answer hasn't changed since the last time you asked the question.

I'd have to know all of the numbers involved, but in most cases a married couple collecting SS and having significant other income WILL pay more tax than 2 singles with the same income. It can be several thousand more in taxes as a married couple.

The reason for this is the way that the taxabliltiy of Social Security is calculated. It is skewed towards the single person.

Answer 3

I am assuming that you both collect SS on your own accounts, and not as a surviving spouse or former spouse. Check with your SSA office to see if either of your benefits will change because you marry.

Your issue isn't the income tax on your pensions and investments. If that is the only income you have, then combining your returns when you marry will probably have no adverse effect. Your real issue is the tax on Social Security benefits.

For income taxes on SS benefits, the important number is not the total income, it is

Income from pensions and investments plus 1/2 SS benefits.

Let's say that you each have $25K of pensions and investments and $20K of SS. Your number from above is $35K. With this number, you each are paying taxes on about $5,000 of your SS benefits, as figured from the IRS worksheet.

If you combine your incomes and file a joint return, with the exampe I use, you together will pay taxes on $24,100 of your SS benefits. So you will have tax on an additional $14,000 or so of your benefits.

Since your incomes may not follow the example I used, go through the worksheet below to see exactly what is happening to your tax on SS benefits.

In the "best" case, you each are taxed the maximum of 85% of your benefits, and that can't get worse if you marry. But if either of your are paying tax on less than 85% of your benefits, your tax on SS benefits will increase if you marry.

Getting married and filing separate returns won't help either, the worksheet makes sure you can't escape the increase in tax on SS benefits if you are married.

Here's the worksheet:

http://www.irs.gov/pub/irs-pdf/i1040.pdf
(go to page 28)

Answer 4

You end paying federal taxes once you die or grow to be a citizen of yet another u . s . a . (then you certainly initiate taxes as a citizen for that different u . s . a .). ALL countries interior the international have a tax! recover from it!! Or... grow to be a tax cheat and not report your return for some years yet... you nonetheless ought to pay federal taxes ... so this final one does not fairly be conscious.

Answer 5

You'll probably pay less, but one or both of you may lose soem soc sec benefits from being married - talk to a CPA who can do the analysis for you to see if you lose more income than you gain in tax savings