Shouldn't getting Married helped my taxes?

[coomarlin]

Not huge life changing amounts but annoying none the less.

Last year between me and my girlfriend as an unmarried couple we received about $1500 in fed and state tax returns. ($1300 federal and $200 state).

This year as a married couple filing jointly we will receive $1275 from the feds but we apparently owe the state $360! WTF? Our jobs haven't changed and our income is basically the same. So instead of netting $1500 we will only net about $915

We have a very simple return as we don't have any kids and do not own a home yet. We take a standard deduction and don't itemize.

I always thought getting married helped your taxes?

 

[PokerGuy]

Hmm..... there's something missing from the info you provided. In most circumstances filing joint is beneficial. There's a few scenarios where filing separate returns is better, but generally that's not the case. If neither one of you changed your withholding rate (by way of W4), and neither one of you changed anything significant in terms of income, then what you get in terms of a refund should not be all that different.

Can't tell without more detail info, but I'd bet you're overlooking something......

 

[edro]

Did either one of you change your withholdings?
Does your wife work part time or not withhold as much?

 

[meltdown75]

A few years ago I was entering all of my info into QuickTax, getting excited at the growing refund amount displayed in the upper corner of the program... then my wife entered hers and it plummeted down to -$150...

pwnt

 

[Kelemvor]

If you're using tax software, just go back and redo it as married filing separately and see what you end up with.

 

[EagleKeeper]

Your Federal refund has not changed - possibly slipped into a higher bracket with the dual incomes

Your state tax is a seperate issue

 

[Joemonkey]

Originally posted by: Kelemvor
If you're using tax software, just go back and redo it as married filing separately and see what you end up with.

yup, for Federal we're married filing jointly, State married filing separately. When I tried married filing joingly with State, we owed like $160, changed it to married filing separately and we got back $4

 

[CPA]

Most likely your state has "marriage penalties" that haven't been fixed. What state are you in?

 

[coomarlin]

With TaxAct I had the option to compare Joint vs seperate for Fed but not state. They were within $26 dollars. It's the state tax thats getting us. Neither of us changed our withholding. Our federal tax return is amost identical to last years. It's the state tac return thats gone from ~+$200 to ~-$360

Are we able to file jointing on federal and seperately on state? I figured they must be the same.

 

[LostUte]

Since you got married, you probably changed your how much tax was taken out. Paying less through the year = smaller refund.

 

[DrPizza]

For a proper comparison, you shouldn't be looking at the amount of your return, but rather, when all's said and done, how much did you actually pay over the course of the year in federal and state taxes? And, then, you might want to look at that as a percentage of your income; assuming your income wasn't identical between the two years. I don't know if anything's changed for your state, as you didn't say what state you're in (and even then, I wouldn't know, but someone might). However, just last month I received a memo from our business office alerting everyone that the amount on their paychecks would be changing because of a new tax witholding table they're following. (the difference was pretty small)

 

[dullard]

The refund number is meaningless. I could have them withhold $50,000 and then get $40,000 back and claim I got a massive refund. All that proves is that I am an idiot. Instead, I should have them withhold $9,000 and owe $1,000 when tax time comes. Either way, the net taxes that I paid are $10,000.

So consider what are these numbers.
1) Your federal tax in 2006. Don't look at the refund, look at what you paid (withholdings - refund).
2) Your state tax in 2006. Again, not the refund, but how much state tax you actually paid.
3) Your wife's federal tax in 2006.
4) Your wife's state tax in 2006.

Then compare those numbers to your combined sum in 2007. Then and only then can you see the difference in being married.

Edit: Doh. Beaten by DrPizza by 1 minute. Also do what he said to see if your total income changed, and consider that when you see how much tax was paid. If you got raises or bonuses that may account for how much you paid. Or you can take 5 minutes to do the 2007 taxes as if you were still single and see what your returns could have been.

There is a significant marriage bonus for many couples. There is a small but noticible marriage penalty for a few couples. But your refund number won't tell you that.

For an example of a marriage bonus, consider a middle class couple where one is the main wage earner (a very common situation). Consider one earner making $40,000 and the other making $10,000 with no significant adjustments or deductions. Together in 2007, they'd pay $4096 in federal taxes. But if they were single they'd pay $4300 and $126 for a total of $4426. That is 8.1% more tax paid for being unmarried, and this is extremely common. The marriage penalty is fairly rare.

 

[lupi]

Recheck you state return. Mine has a seperate married easement step when doing a joint return to prevent you from paying more when filling jointly vice seperatly. I know the first time I filled a state retrun I missed it and was wondering the same thing.

 

[Fritzo]

Go to an accountant. You're not doing something right.

Also, start banging out some kids. They're worth like $1500 each

 

[pontifex]

you basically want your return and owe amounts to be $0, right?
shouldn't this be in the stickied tax thread anyway?

 

[coomarlin]

I'm going to do a comparision of last years taxes with this years. Like I said though, our incomes haven't changed at all and neither of us changed our withholding. So I expect the ratio of income to withholding to be pretty much the same bewteen 2006 and 2007.

 

[allisolm]

Originally posted by: pontifex

shouldn't this be in the stickied tax thread anyway?

Pssst... both CPA and Eaglekeeper posted in this thread without moving/locking it. That should be a clue.

Coomarlin says his problem is with state tax rather than federal. The tax thread doesn't deal with state tax problems.

 

[TheTony]

Originally posted by: dullard
For an example of a marriage bonus, consider a middle class couple where one is the main wage earner (a very common situation). Consider one earner making $40,000 and the other making $10,000 with no significant adjustments or deductions. Together in 2007, they'd pay $4096 in federal taxes. But if they were single they'd pay $4300 and $126 for a total of $4426. That is 8.1% more tax paid for being unmarried, and this is extremely common. The marriage penalty is fairly rare.

I assume this is married filing jointly? Just curious.

 

[Lalakai]

i remember talking with an accountant regarding the marriage aspect of taxes; he and his mate were living together, married in all but name, with the biggest reason being the tax penalty of being married. He probably knew what he was talking about.

 

[pontifex]

Originally posted by: allisolm

Originally posted by: pontifex

shouldn't this be in the stickied tax thread anyway?

Pssst... both CPA and Eaglekeeper posted in this thread without moving/locking it. That should be a clue.

Coomarlin says his problem is with state tax rather than federal. The tax thread doesn't deal with state tax problems.

his op was talking about both, but whatever.

 

[meltdown75]

Originally posted by: pontifex

Originally posted by: allisolm

Originally posted by: pontifex

shouldn't this be in the stickied tax thread anyway?

Pssst... both CPA and Eaglekeeper posted in this thread without moving/locking it. That should be a clue.

Coomarlin says his problem is with state tax rather than federal. The tax thread doesn't deal with state tax problems.

his op was talking about both, but whatever.

mini-mod, take a timeout from your duties plz. thx

 

[Dirigible]

It's not necessarily incorrect. Being married costs me thousands in extra taxes a year. The government is trying to convince me to divorce!

 

[mugs]

Originally posted by: pontifex

Originally posted by: allisolm

Originally posted by: pontifex

shouldn't this be in the stickied tax thread anyway?

Pssst... both CPA and Eaglekeeper posted in this thread without moving/locking it. That should be a clue.

Coomarlin says his problem is with state tax rather than federal. The tax thread doesn't deal with state tax problems.

his op was talking about both, but whatever.

Yes, I'm sure he cares about the $25 difference in federal taxes when he has a $500 difference in state taxes. Just shut up.

 

[Mxylplyx]

Measuring your tax burden by the amount of your tax return is a simpleton way of going about it. Your taxes have gone down after getting married, and your tax withholdings likely went down as well if you changed your W-4 status to married. If your that beat up about it, both of you file single and 0, then you can both feel warm and fuzzy come tax time when the government returns your large interest free loan to them.

 

[coomarlin]

Originally posted by: Mxylplyx
Measuring your tax burden by the amount of your tax return is a simpleton way of going about it. Your taxes have gone down after getting married, and your tax withholdings likely went down as well if you changed your W-4 status to married. If your that beat up about it, both of you file single and 0, then you can both feel warm and fuzzy come tax time when the government returns your large interest free loan to them.

You don't need to be a sarcastic smartass about it. I never said I wanted some big fata$$ check. I personally wouldn't care as long as I break even.

We just got married in November and after changing my W4 status to married my salary paycheck did not decrease or increase one bit.

My issue was that my federal taxes did not change based on getting married but my state taxes changed quite drastically in my opinion. we went from a $1300 fed return to a $1275 return and that measily $25 difference is probably attributed to a slight increase in earned interest. But our state return went from +200 to -360 which I thought was odd. Sue me..............

You might not get "Beat Up" about taking a $500 state hit but I wasn't expecting it. Especially condsidering we broke even with the fed return. If you read my initial post I said that $500 was not a life changing amount and it will not break my bank. Was just looking for some clues as to why we lost $500 just for getting married.