Marriage, Divorce and Taxes

Both ‘events’ can impact your taxes. (Dreamstime/TNS)

By Sandra Block From Kiplinger’s Personal Finance

Marriage and divorce can affect your taxes. If you experienced either of those in 2022, here’s how to minimize their federal tax bite.

Marriage

Following a pandemic pause, more than 2 million couples got married in 2022. If you’re among the newly hitched, filing your first tax return as a married couple is a cold reminder that the honeymoon is over.

The first decision you’ll need to make is which filing status to use. For the majority of couples, filing jointly will deliver the lowest tax bill. Many tax breaks are unavailable to couples that choose married filing separately, including money-saving credits to offset the cost of raising children and sending them to college. Thresholds for certain deductions are higher for couples who file jointly, which means you can earn more and still qualify for tax breaks. Joint filers also qualify for a much larger standard deduction—$25,900 in 2022, compared with $12,950 for couples who file separately.

There are a handful of circumstances in which filing separately will result in a lower tax bill. If one spouse had a serious medical condition that resulted in large out-of-pocket expenses, filing separately could enable that spouse to deduct those expenses. You can only deduct medical expenses that exceed 7.5 percent of your adjusted gross income, so you’ll have a better shot at reaching that threshold if the spouse who incurred the expenses files separately.

Filing separately could also pay off if there’s a large disparity between your income and your spouse’s income. By filing separately, the lower-earning spouse could qualify for tax breaks that are only available to taxpayers in lower tax brackets.

Finally, you should consider filing separately if your spouse has unpaid child support, owes back taxes or has defaulted on federal student loans. By filing separately, your refund won’t be reduced by those liabilities.

If you and your spouse are both high earners, you could find yourself hit with the marriage penalty, which occurs when a couple filing a joint return pays a higher tax than they would pay if they remained single. The 2017 Tax Cuts and Jobs Act eliminated the penalty for most couples (and expanded the potential for marriage bonuses), although some couples in the top tax brackets may still pay the penalty.

Divorced or Widowed

If divorced, your filing status is based on the year in which your divorce became final. If you were divorced as of Dec. 31, 2022, your filing status is single or head of household. If you and your spouse have split but didn’t finalize the divorce by the end of the year, you have the option of filing a joint return or married filing separately—whichever delivers the lowest tax bill.

The rules are different for taxpayers who lost a spouse. In that case, you can file jointly for the year your spouse died as long as you didn’t remarry. This can often result in a larger refund or lower tax bill because you can claim the full standard deduction available for married couples, along with potentially lower tax rates for a joint return.

(Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.)

©2023 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

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