When to change withholding

[makeugohmmm]

What is the name of your state (only U.S. law)? MN
Hello. Another quick tax question. I am getting married in September this year. Would it be wise to change my withholding at work now? Or wait until after we're married. I have 2 kids that I claim every year and I make less then 35,000 so my withholding right now is low. He has 1 kid he claims every year and his income is in the 42,000 range so his withholding is higher then mine. Would it be smart to change my withholding to married now and bump up my withholding? I just don't want to owe a huge amount at the end of next year.

 

[tranquility]

What is the name of your state (only U.S. law)? MN
Hello. Another quick tax question. I am getting married in September this year. Would it be wise to change my withholding at work now? Or wait until after we're married. I have 2 kids that I claim every year and I make less then 35,000 so my withholding right now is low. He has 1 kid he claims every year and his income is in the 42,000 range so his withholding is higher then mine. Would it be smart to change my withholding to married now and bump up my withholding? I just don't want to owe a huge amount at the end of next year.

Don't change to married, single is proper when both spouses work.

 

[makeugohmmm]

Never change to married?

So, if we both work we should never claim married on our W4? Why is that? Just generally curious because getting married will already reduce my refund quite a bit, and now you're saying there will be no tax break to my income withholding since we both work? So, getting married will essentially cost me a bunch of money? Better figure out how much I actually like this guy. Just kidding. LOL

 

[tranquility]

So, if we both work we should never claim married on our W4? Why is that? Just generally curious because getting married will already reduce my refund quite a bit, and now you're saying there will be no tax break to my income withholding since we both work? So, getting married will essentially cost me a bunch of money? Better figure out how much I actually like this guy. Just kidding. LOL

Married tends to be for if only one spouse works.

While not current, a good estimate as to if getting married helps or hurts your tax situation can be found here:

http://taxfoundation.org/article/understanding-marriage-penalty-and-marriage-bonus

With two children, you will suffer a tax penalty by getting married. (See chart #4.)

 

[Zigner]

So, if we both work we should never claim married on our W4? Why is that? Just generally curious because getting married will already reduce my refund quite a bit, and now you're saying there will be no tax break to my income withholding since we both work? So, getting married will essentially cost me a bunch of money? Better figure out how much I actually like this guy. Just kidding. LOL

Google the term "Marriage Penalty"

 

[makeugohmmm]

Wow

I had no idea it would matter that much. Wow. Kind of goes to show why people aren't getting married anymore. Thank you for your help. Now, I don't know what to do.

 

[tranquility]

I had no idea it would matter that much. Wow. Kind of goes to show why people aren't getting married anymore. Thank you for your help. Now, I don't know what to do.

If you're not sure you want to enter into a lifetime partnership because of taxes, then there are two things to think about:

1. Perhaps you should get a tax professional run a dummy return to see what the actual (rather than statistical) hit will be.

2. Perhaps you don't really want to get married.

 

[makeugohmmm]

Yes, I guess on #1 would be a good idea. As far as #2 goes, I do want to enter into a lifetime partnership. But maybe I don't want to be "married" if it's going to cost me 1000s of dollars each year! I could just run down to the county and get a name change and tell everyone we're married. Or perform a non legal ceremony which marries us in every thing except according to the government! What is the benefit of being legally married when all else can be done with a ceremony and a name change?

 

[tranquility]

Yes, I guess on #1 would be a good idea. As far as #2 goes, I do want to enter into a lifetime partnership. But maybe I don't want to be "married" if it's going to cost me 1000s of dollars each year! I could just run down to the county and get a name change and tell everyone we're married. Or perform a non legal ceremony which marries us in every thing except according to the government! What is the benefit of being legally married when all else can be done with a ceremony and a name change?

Marriage is a legal partnership that is not always easy to unwind. As well, it is a partnership that the community supports as well as one's own ethics as related to the institution. Fewer actual marriages break up than pretend marriages the people take seriously. You have issues that are related to property ownership, debts incurred, income and (to a lesser extent modernly), benefits in the workplace. There are legal duties, responsibilities and rights associated with a legal marriage over a committed relationship. This is a core reason as to why gay marriage was a real rather than simply a political issue--because it matters.

Before the change in the law, I used to spend a lot of time helping same sex couples plan on how to paper over the legal difference between marriage and committed relationship. Even with a lot of work, legal documents and planning, it STILL wasn't exactly the same and was subject to challenge.

 

[LdiJ]

Yes, I guess on #1 would be a good idea. As far as #2 goes, I do want to enter into a lifetime partnership. But maybe I don't want to be "married" if it's going to cost me 1000s of dollars each year! I could just run down to the county and get a name change and tell everyone we're married. Or perform a non legal ceremony which marries us in every thing except according to the government! What is the benefit of being legally married when all else can be done with a ceremony and a name change?

It may cost you thousands of dollars a year in refundable tax credits, but it will cost you potentially tens of thousands of dollars in what might have been marital assets if and when you split up, or he passes away. I do not know how old your children are, but those refunds do not last forever.

 

[makeugohmmm]

Is there ever any advantage of married, filing separately when there's young kids involved? Or does that take away all tax breaks and more. Just trying to understand, thanks for being patient with me.

 

[makeugohmmm]

Youngest kids are 6, so we're talking quite a few years worth.

 

[tranquility]

Is there ever any advantage of married, filing separately when there's young kids involved? Or does that take away all tax breaks and more. Just trying to understand, thanks for being patient with me.

Our software runs the comparison on every joint return. A diagnostic will show if it is advantageous. While possible, I have rarely seen any advantage. Rarely > Zero.

 

[LdiJ]

Is there ever any advantage of married, filing separately when there's young kids involved? Or does that take away all tax breaks and more. Just trying to understand, thanks for being patient with me.

Married filing separately taxes away any refundable tax breaks for children...and those are the big tax breaks. Therefore, its almost never a good idea.

 

[makeugohmmm]

Thanks everyone! Great advice as always.