by Jeremy Craig
Once the vows have been read, songs sung, kisses exchanged and the last drunken family member hauled out of the reception hall, a married couple faces a decidedly un-romantic set of issues.
Changing tax filing status from single to married, whether filing jointly or separately, can trigger major changes to how much a couple pays to the federal government every April.
The federal tax system in the United States has long been known for the oft-derided “marriage penalty” that happened to some couples, creating a situation where two spouses pay more income tax filing jointly than if they had remained single and filed as individuals.
That’s because both incomes were combined, possibly throwing the couple into a higher tax bracket.
This still happens to some, but tax reforms since 2001 have changed the situation.
“Congress has been trying to remedy the marriage penalty,” said Tad Ransopher, director of the master of taxation program at Georgia State’s J. Mack Robinson College of Business.
Depending on income, many newly wed couples now could see their taxes go down.
It’s based on a higher standard deduction, a kind of allowance for living expenses, which lowers the amount of income subject to tax.
“This is almost like your ‘cost of good soul,'” Ransopher said. “The Internal Revenue Service expects everybody to be going to the doctor, to buy groceries and other things, so they give us this standard deduction.”
Couples must file jointly to receive the benefit, making the deduction two times more than the single person’s deduction.
“If you’re married filing separately, you’re not going to get the bigger deduction,” Ransopher said. “You’re going to have to split it.”
Taxes aren’t the end of the story, either.
While a person’s taxes deducted from paychecks for Social Security and Medicare don’t change upon getting married, marriage ties one person’s Social Security and Medicare benefits to the other.
The programs were created at a time when the government didn’t expect women to work outside the home, and thus wouldn’t work long enough to be eligible for benefits on their own. The law tied their benefits to those of their husbands.
Although most people now work long enough to be eligible for Social Security and Medicare on their own, the legacy remains.
“Anybody legally married to an individual who dies is eligible for survivor benefits,” said Bill Custer, associate professor and director of Georgia State’s Center for Health Services Research. “If that person dies early, some fraction of that worker’s Social Security benefits and eligibility for Medicare [for the surviving spouse] are determined because of that spousal arrangement.”
And because of that arrangement, getting remarried could be a financial detriment to a surviving spouse, who would lose survivor benefits from his or her deceased husband or wife.
“You cannot continue to get benefits if you remarry before age 60, or if you’re disabled and remarry before age 50,” Custer said.