Taxes for Married vs. Unmarried

The U.S. tax code favors married couples in many ways.

marriage image by Mykola Velychko from

Although the IRS does not consider marriage a taxable event, getting married can affect your taxation status in both positive and negative ways. The negatives include the possibility of marriage moving you into a higher tax bracket and the possibility that you could be penalized for your spouse's tax underpayments. However, the tax code favors married couples over singles when it comes to some aspects of retirement planning, estate planning and capital gains tax.

The "Marriage Penalty"

The so-called "marriage penalty" refers to the fact that getting married to a spouse with significant income can raise you into a higher tax bracket if you a file joint tax return. Although Congress has enacted legislation that partially alleviates this problem, it is still possible to pay a higher tax rate after you marry. The IRS will consider you married for the entire tax year as long as you were married by the end of the year.

Vicarious Liability

When you are single and file your own taxes, you are responsible for your own mistakes. If you file jointly and your spouse does the paperwork, however, you may both be at risk. If your spouse makes a mistake and you pay the IRS less than you owe, both of you are liable for the underpayment, including penalties and interest. If your spouse can't pay, the IRS can come after you for the full amount, even if you are already divorced by the time the IRS discovers the mistake. You might be eligible for relief, however, under the "innocent spouse" provision of the tax code. Fortunately, you can't be criminally prosecuted for tax evasion committed by your spouse without your knowledge.

IRA Benefits

If you are single, you must earn income during the tax year to contribute to an Individual Retirement Arrangement. Wages and self-employment earnings count as earned income, but income from inheritance or investments doesn't count. If you are married to a spouse who is earning income and has opened an IRA, however, she can open one for you. Either one of you can contribute to it as long as one spouse is earning income. Moreover, the maximum income phase-outs that apply to traditional IRAs are much higher for a married couple filing jointly than for single filers.

Estate Tax Benefits

If the value of your taxable estate exceeds the applicable exclusion amount — $5.12 million for taxpayers who pass away in 2012 — your taxable estate will be liable for a tax of up to 35 percent of the portion of its value that exceeds the exclusion. Your heirs will receive only what remains after this tax and other estate debts have been paid. If you marry, however, you can leave your entire estate to your spouse tax-free, thereby deferring estate tax until the last surviving spouse dies.

Tax-Free Capital Gains

If you are single and you sell your primary residence for a profit, you can exclude up to $250,000 of your profit from federal taxation, as long as you lived at the residence as its owner for at least two of the previous five years. If you are married and file jointly, you may be eligible to deduct up to $500,000 of your profit.