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Hypothetical tax question?
Two people are living together in a long term, committed relationship and are not married. They are considering getting married for the tax benefits. They live in Nevada where there are not state or local income taxes, only federal. One makes $400,0000 a year, the other makes $50,000 a year. Would it be most financially beneficial to stay unmarried and file as two single people, get married and file jointly, or get married and file separately? Why?
Please show some evidence for your response, if you're just assuming or guessing that does me no good.
7 Answers
- troLv 75 years ago
the tax rate for single or married filing separately are the same, the standard deduction is the same and the tax rate for married jointly is NOT exactly half as much, ie. the single rate is somewhat more than half as for the married jointly filers
ie. filing single or married separately will pay higher income tax
with your kinds of income neither has some of the benefits for lower income earners so that is not a consideration
if one of you has the ability to use Sch A, filing married separately could cause one or the other of you undue harm in that you have to both itemize and this could possibly mean neither of you exceeds your standard deduction
getting married should not be based on the tax situation unless this is a business marriage, not one of emotional relationship
- StephenWeinsteinLv 75 years ago
It would be better to stay unmarried, for reasons that have nothing to do with taxes. The reason it would be better to stay unmarried is that a couple that gets married for the tax benefits is likely to get divorced eventually, and the cost of a divorce is much more than the tax benefit of the marriage. It makes sense to get married only if they are doing it for other reasons, and not for the tax benefits.
If they are going to get married, then it makes more sense to file jointly than separately, because filing jointly (or unmarried) they can claim the earned income tax credit and various other benefits that would not be available if they were married filing separately.
- ?Lv 75 years ago
You did not provide all the needed information like mortgages and expenses. Here is what YOU can do. Rerun last years taxes as both married filing separately and married filing jointly. Wow, you can see your own results.
- Anonymous5 years ago
So get three blank tax forms and run the numbers all 3 ways. Don't forget the extra taxes due to high income.
- Max HooplaLv 75 years ago
It would be beneficial from a tax standpoint because the lower wage partner would dilute the high wage partner's income resulting in a lower overall total due.
- SlickterpLv 75 years ago
Do he returns both ways and find out. Based solely on that info, hard to say, but it is almost ALWAYS better to file MFJ.
- JudyLv 75 years ago
Getting married but filing separately would be worst. Married, joint return would be best.