The least romantic Valentine's post ever. I wrote this for V-Day, but couldn't convince myself to publish it then.
On my last musing about the hazards of self-employment, both Living Almost Large and E.C. suggested I get married, put fiance on my health insurance, and have a big wedding later. I don't have a religious problem or anything like that, I have a math problem.
If we were married, he could have some of the best insurance in the country for $20 a month. Great! Problem, we would then be married and would have to pay taxes as such.
I ran a lot of tax scenarios. That's hard! It's particularly hard when you add in SEP-IRA, the profitability of his side business, and how much side business I will have. Whew. All said, it took about an hour.
Since fiance will not be quitting his day job until March, he will at least have some income. If his new business makes any money at all (I mean $10), getting married would cost us 7K in taxes as opposed to filing as single and living in sin.
If he makes more money, the penalty just increases. If his business makes 75K, being married will cost us 18K in taxes. Yipes.
I looked into married filing separately briefly, but we live in a community property state, so we would report 50/50. And that is too much math, even for me.
Sunday, February 17, 2008
Subscribe to:
Post Comments (Atom)
6 comments:
Hehe welcome to the real world bimbo! don't you make 150,000?? why are you worried about taxes, remember only the poor pay, not the rich, so if your really making a lot of money you know how to avoid taxes...
Hey, minimum wage. I paid more in taxes than you made last year. So, I am very worried about taxes.
If only I could live on capital gains.....
Um, actually you'll save more filing jointly. When you factor in Health Insurance and potential liabilities even as a cohabitating couple, in case of accident they can sue you jointly, especially being engaged and living together.
I believe also if his business does not do well, then his lack of income, will allow your income to be spread between 2 people instead of one. SO if he makes $40k then you make $200k, you are taxed at $120k instead of $200k and $40k. I would totally get married for medical insurance.
I got married for personal smart reasons too! BONUS was the tax break for a foreigner.
Hmm, you're probably right, Living Almost Large. I need to talk to an accountant (after tax season).
Intriguing.....
OK, Living Almost Large. I did the math. I will post the results when I have a spare second.
DogAteMyFinances,
You may well be right (that you paid more taxes than I made last year).
But did you pay a higher EFFECTIVE TAX RATE than I did?
The average childless adult earning $15K without tax breaks ends up paying a higher effective tax rate than most working families with $50K-$100K income.
Post a Comment