changes in tax status

[thomascantor]

wavyarms' recent post has reminded me of a task I've meant to set for myself. Having recently wedded stealthmuffin, I am suddenly faced with more options than the usual obvious one when filling out forms of the W-4 ilk, and of course we have to decide whether to file jointly or separately for last year. This is tricky, because not only do we each have regular

Comments

[g_me]

We've filed jointly since we've been married, and K pays taxes quarterly on his grad stipend (mine are withheld through my employer). On my W-4, I'm in the "married" category but I have extra cash withheld each month because of that, based on some formula that they give you on the W-4. It seems to work ok for us, and this is also how turbo tax told us to do it.

One thing that might make some difference is whether or not there is a big difference between your two incomes. I'm not exactly sure which is "better," tax-wise, but I seem to remember, when we first got married, trying to figure out if it would make sense to file differently based on how large a disparity there was between our two incomes. Just a thought.

[thomascantor]

That's a good question. Did you figure out how much or what scale of a disparity would make sense for filing separately, given that you chose to file jointly?

[g_me]

So, I asked my economist/finance husband about this via gchat to jog my memory, and he said the following:

"always file joint if you are married; married filing separately-- higher taxes in almost every case.
it make sense (tax wise) to get unmarried (legally) if you make about the same; taxes are progressive, so you pay a higher rate if you have a higher income and income is calculated at the household level"

Not that getting legally divorced is a good solution. :-)

check out:
http://marriage.about.com/od/finances/a/marriagepenalty.htm