I’m engaged, and our wedding is planned for 2025. But I recently learned that the IRS considers you married for the entire year if you get married before December 31. This got me thinking—should my fiancée and I get a marriage license before the end of the year to save on taxes?
Here’s our situation: we live in California. She makes around $65k, and I make about $240k. One issue is that she already contributed to her Roth IRA, so we’d have to sort that out.
Does anyone have experience with this or know if the potential tax savings would make it worth it? Thanks!
@Lior
It depends on how your incomes line up. If one of you earns significantly less than the other, there’s usually a bigger benefit. In your case, about $8k gets moved to the 12% bracket, which gives around $800 in savings.
Zion said: @Lior
The calculator includes FICA taxes, which don’t change with marriage. To get accurate results, exclude FICA taxes for all three scenarios.
Ah, I see what you mean. That makes sense now. Thanks!
Same situation here! My fiancée and I secretly got married for tax reasons with our big wedding planned for 2025. We’re also in California, same combined income. I’ll have to recharacterize my Roth contributions too. Our tax advisor said we’d save, so we did it.
If you look at the brackets, you’ll notice that filing separately puts one of you in the 32% bracket, but filing jointly avoids it. The first $47k is taxed at 12% instead of 22%, which saves $4k right there, plus savings in the higher brackets. Merging finances made this an easy decision for us.
@Vann
If it weren’t for the Roth IRA contribution, I’d have done it already! We were planning on a January marriage, but the savings might make it worth doing now.
Lior said: @Vann
If it weren’t for the Roth IRA contribution, I’d have done it already! We were planning on a January marriage, but the savings might make it worth doing now.
Yeah, it’s worth considering. Many brokers can help recharacterize contributions as nondeductible and backdoor them into your Roth. It’s surprisingly simple.
Ellis said:
You might be better off waiting until after January 1 to avoid dealing with the Roth IRA issue.
Better for financial reasons or just to avoid the hassle?
To save $900, you’d need to withdraw funds from the Roth and handle any earnings this year. My advice: your fiancée should keep her retirement fund intact. Rushing to the courthouse for $900 might not be worth it.