Plenty of soon-to-be married people have heard the joke lauding one of marriage’s greatest benefits: It comes with a nice tax break. Unfortunately for those married parties, it looks like their single counterparts may be getting a better deal thanks to a few new changes to tax law.
For couples in Florida and nationally who have been considering a divorce, the new tax benefits might make a split more financially appealing, for three reasons.
The most significant of these changes is in regards to the Patient Protection and Affordable Care Act, better known as Obamacare. Two additional taxes could create a tax increase of up to 4.7 percent for certain households, provided the household earns in excess of a certain threshold. But while that threshold is $200,000 for a single taxpayer, married couples have to start paying that additional tax at $250,000.
That could force two individuals — who wouldn’t reach that threshold as single filers — to pay the additional tax as married filers.
A similar threshold scenario will be seen in regards to income tax. Although 99 percent of all taxpayers can expect to pay their income tax in 2013 at the same levels seen in 2012, the top one percent of taxpayers will face a tax rate increase from 35 to 39.6 percent. This threshold is set at $400,000 for single taxpayers, but just $450,000 for married couples.
The third change is regarding itemized deductions, which will be limited for the highest bracket of wage earners. While some deductions will be phased out for single tax filers once their income hits $250,000, married couples will lose those deductible benefits at $300,000.
It may not seem fair, but that’s the reality for some married couples in 2013 and beyond, and it is worth considering as you weigh the financial implications of a divorce.
Source: Forbes, “Want to save on taxes? Get a divorce.,” Tony Nitti, Jan. 22, 2013