Tax Refund: Everything You Need to Know About Marriage Tax Penalty

by Victoria Santiago

Marriage can affect your tax refund in a few different ways: some negatively, some positively. For example, you might get a tax penalty. In some cases, you might even be eligible for a marriage bonus. Either way, being informed about how your relationship impacts your tax situation can help you get the most out of your refund.

This year’s tax season is extra challenging. From IRS delays to extra paperwork, to your average run-of-the-mill errors, there’s a lot that could go wrong. The best way to maximize your tax refund is to know exactly what to look out for.

At a Glance

  • The marriage tax penalty takes effect when the taxes you pay jointly exceed the taxes you would pay as a single filer.
  • Other situations can also trigger this specific tax penalty.
  • On the other hand, some couples could get marriage bonuses.

How Marriage Can Impact Your Tax Refund Negatively

We briefly touched upon the marriage tax penalty, but we’ll get more in-depth with it here. Married couples often see larger income tax brackets. Thus, the amount of income that will get taxed goes up. The marriage tax penalty will kick in if you and your spouse pay more taxes together than you would single.

Other situations apply, too. For example, married homeowners with large mortgages may also trigger this penalty. This penalty isn’t just on a federal level, either. There are several states that have a similar penalty in place.

To see if your state has a marriage tax penalty, check the list below:

  • California
  • Georgia
  • Ohio
  • Oklahoma
  • Maryland
  • Minnesota
  • New Mexico
  • New York
  • North Dakota
  • South Carolina
  • Rhode Island
  • Virginia
  • Vermont
  • Wisconsin

The best way to avoid the marriage tax penalty (or any tax penalty, really) is to get advice from a tax professional. They will be able to answer any questions you may have and guide you towards the right choices. There are other options for you, too. The IRS has an online Interactive Tax Assistant that will be able to give answers to many tax law questions. You’ll be able to get information specific to your situation.

A Marriage Bonus Exists, Too

On the other hand, some couples may benefit from being married come tax time. Some married couples will actually be given a bonus when they get their tax refund. In this case, they end up paying less income tax as a married couple than they would if they were single.

For couples filing jointly, they can get a 20% bonus on their income if they have children. However, that bonus goes down to 7% if the couple does not have children.

This bonus usually kicks in when one spouse makes considerably more money than the other, according to The Sun. For example, if one spouse earned $20,000 a year and the other earned $80,000, the bonus would help get the higher earner’s income into a lower tax bracket.