Divorce for avoiding a marriage tax penalty ?
For current couples who (may) have a marriage tax penalty, what are your tax strategies? Definition of a marriage tax penalty: the partners pay more income tax as a married couple (even filing married separately, note that you can’t filling separately as singles when you married in the US ) than they would pay as unmarried individuals. I wonder how many people intentionally not to have an official marriage certificate because of the tax penalty ? Do you guys have kids? You tell outside that you two are married ? And how many people divorced for avoiding the marriage tax penalty ? ( we’re thinking about that. Any downsides? We have dual citizenships and may keep married in another country but divorced in the US if we need to have less mental/family pressure) Tc: 220k CA. Household ~ 500k. Only W2 incomes. #tax
What about filing separately?
Are you sure? They changed the US tax code a few years back and this isn't true any more. Maybe at the state level only, or do you mean federal?
What a moronic post. There's no way this is real. At HH income of 500k I'm sure youre still better off filing jointly. Even if you were worse off (I don't believe it), you two can file separately instead of jointly and end up with the same result as unmarried couple filing separately. Only reason I can think of OP doing this is because OP cant get in the same page with spouse in terms of income and expenses. So OP wants separate finances and wants to pay taxes separately. This is doable, but will come with a big loss in taxes
You must file as married separately. You can’t chose filing separately in which case you could save 20K that OP is referring to but not legal
I don’t think there is any scenario where this would apply. Filing separately is equivalent to not being married in the first place.
Lockheed is completely wrong, and demonstrates a ridiculously naive understanding of both Federal and CA tax codes.
You learn something new every day. Didn’t realize that the brackets stopped being simple doubling of the tax brackets at the 35% level. Seems to be a penalty on dual high earners more so than a penalty on marriage in general. We just don’t see this problem outside of very high cost of living areas. It would be very rare for people to get to these brackets, much less for a married couple to both be in these brackets
Unless you’re a billionaire like Gates, Bezos to divorce for tax reasons
No one in this thread understands how tax brackets work. For single people, the top bracket hits at about $575K. For married people it's about $350K each, whether you file jointly or separately. The tax code was written for a time when women did not work.
That's true, but there's no other effect for married filing separately until you hit the 350k threshold. Given it's a 2% difference, marriage filing separately is exactly the same as filling single but with an added 2% tax on every dollar from 350k - 575k. For most people that's 0 penalty, though TC of 550k would feel almost all of it with a penalty of 4k. Most importantly, $0 difference applies in OP's case...
And then when one of you is arrested for tax fraud or some other shenanigan, the other one can be brought to court and made to testify against you because you aren’t married. 🤡🤡🤡
If you divorce you lost the innate ability to make decisions about each others health in crises and you don’t automatically inherit assets in death.
Blind is full of weird people.
Wtf? How naive can you be to divorce just so you can avoid tax
Every year we feel that we are paying 20k-30k to buy the certificate 😭
Oh relax. You’ll loose way more than that in a divorce 🤣