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Have you considered meeting with a tax professional to run the numbers both ways? We did this last year and found out we'd save about $4,300 by getting legally married, mostly because of the income disparity. Our situation was similar - I make about $220k and my partner makes around $75k with one child. The marriage penalty mainly hits when both spouses earn similar high incomes, but in cases like yours and mine, there's often a marriage BONUS because the lower bracket of the higher-earning spouse gets pulled down. Plus don't forget about estate planning benefits - if something happens to either of you, being legally married provides significant advantages for inheritance, social security benefits, etc.
Thanks for the suggestion! Did the tax pro charge a lot for that analysis? And did they look at things beyond just the immediate tax year impact?
Our tax accountant charged $250 for the analysis, which seemed reasonable considering the potential savings. And yes, they did a multi-year projection showing how the benefits would likely increase over time as our income gap continued. They also looked at retirement planning implications, which was super helpful. For example, being married gives you more flexibility with spousal IRAs and potentially higher contribution limits depending on your specific retirement plans. The estate planning advantages were just explained as additional benefits beyond the immediate tax savings.
Just a quick word of warning - make sure you're thinking about the FUTURE as well as your current situation. My wife and I got married when there was a big income gap (I made 3x what she did) and it was great tax-wise. Fast forward 5 years, she got a massive promotion and now we're both high earners, so we're paying that marriage penalty we initially avoided.
That's a really good point. Tax situations can change dramatically with career advancement. Have you guys considered filing separately now that you're both high earners?
Has anyone had luck with wage and income transcripts directly from the IRS? I know they don't show state withholding info but I'm wondering if they're detailed enough to use for filing if you can't get the actual W2s?
Thanks for the info about the retirement contributions - I hadn't thought about that! Did you have any issues with the IRS accepting your return when you used transcript information instead of the actual W2 details?
No problems with the IRS accepting the return at all. The wage and income transcript information comes directly from them, so it matches what they already have in their system. Just make sure if you're using tax software that you select the option to enter the information manually rather than importing a W2, since you won't have the actual form to scan or upload.
If your using TurboTax from previous years, they save copies of all ur docs I'm pretty sure. I was able to download my old W2s from there when my laptop crashed last year. Worth a try if that's what u used before?
Don't sleep on Cash App Taxes (formerly Credit Karma Tax). It's completely free for federal AND state returns, and handles most tax situations including self-employment. I've used it for the past two years after switching from TurboTax. The interface is clean and straightforward, and they don't try to upsell you because there's nothing to upsell - it's already free! The only limitation is they don't support multiple state returns, foreign income, or some less common forms like Form 2555.
How does Cash App make money from this if it's completely free? Are they selling your data or something?
Great question! They make money through the broader Cash App ecosystem. The tax service helps bring users into their platform, where they can earn revenue from other financial services like their Cash Card, bitcoin trading, and instant deposits. They explicitly state in their terms that they don't sell your tax data to third parties. Their business model is about creating a comprehensive financial platform rather than making money directly from tax preparation.
Has anyone tried TaxSlayer? My brother-in-law recommended it but I'm curious about real experiences before switching from TurboTax.
I used TaxSlayer last year. It's definitely cheaper than TurboTax ($29.95 for federal + state when I used it), but the interface feels a bit dated. Got the job done though and my refund was exactly what I expected. The questions weren't as clear as TurboTax, so I had to google a few things to make sure I was entering information correctly.
Thanks for sharing your experience! That price point definitely sounds better than what I've been paying. I'm not too worried about the interface as long as it gets the job done correctly. Did they try to upsell you throughout the process like TurboTax does?
Don't forget to check with your mortgage company too. My lender actually provided a year-end statement showing that my escrow account made a property tax payment in December, even though the county doesn't consider the taxes "paid" until January. This meant I could deduct it in the year the escrow account made the payment, not when the county recorded it. You might want to check if your escrow made any payments you're not aware of.
This is interesting - so the timing of when escrow makes the payment could change everything? I wonder if my lender is planning to make the payment in Dec 2024 even though it's not due until Feb 2025. How would I find this out?
Check your online mortgage account or call your loan servicer and ask for their "escrow analysis" or "escrow payment history." Most have online portals where you can see exactly when payments were made from your escrow account. Some lenders do make property tax payments early, especially if the due date is early in the following year. The IRS rule is that you deduct the tax in the year it's actually paid by you or your lender, regardless of when the county considers it "received" or what tax year it's for.
Has anyone used TurboTax to handle this situation? My closing was in October 2024 and I got a credit for the seller's portion of 2024 taxes that will be paid in 2025, but I'm not sure how to enter this in the software.
I used TurboTax last year for this exact scenario. When it asks about property taxes, only enter the amounts you ACTUALLY paid in 2024. Don't include the credit amount from closing. When you make the payment in 2025, you'll enter that amount on next year's return. TurboTax has a section specifically for home purchase where you enter closing costs, but the property tax credit doesn't go there either - it's just an adjustment to your basis.
Jackson Carter
Sadly, your coworker's view is pretty common. I teach basic finance at a community college, and I do a whole lecture about this exact misconception. About half my students come in thinking tax refunds are free government money. The bigger problem is that this thinking leads to poor financial decisions. People who see refunds as "bonus money" tend to spend it frivolously rather than recognizing it's part of their annual income that could have been better used throughout the year. I use a simple exercise: I ask students if they'd loan me $100 every month with the promise I'll give them $1200 back at the end of the year. They all say no. Then I explain that's exactly what they're doing with the IRS when they overpay throughout the year. The lightbulbs usually start going on at that point!
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Kolton Murphy
ā¢Do you have any simple resources I could share with people who think this way? My dad is convinced the government "gives" him money every year and gets annoyed when I try to explain otherwise.
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Jackson Carter
ā¢I recommend the IRS's own Tax Withholding Estimator on their website, which visually shows how withholding relates to your final tax bill. There's also a YouTube channel called "Two Cents" that has a great 5-minute video called "Tax Refunds Explained" that uses simple graphics to show how the money flows. For some people, seeing their own numbers makes the biggest difference. Have him look at his W-2 form, Box 2 (Federal income tax withheld) and compare that to his refund amount. If his refund is less than what's in Box 2, that clearly shows he's just getting his own money back. If it's more, that's when tax credits are coming into play.
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Evelyn Rivera
Omg your coworker is not alone š My roommate legitimately thought the same thing until last year! She would always talk about how she was gonna "win big on her taxes" and I was like... that's not how any of this works! She kept insisting that because she "got back more than she paid in" it must be free money. What she didn't understand was that the withholding shown on her paystub wasn't her total income - it was just what was taken for taxes. She thought her entire paycheck was "what she paid in" so when she got a refund it seemed like bonus money. It took me sitting down with her actual paystubs and tax forms to show her the math. The look on her face when she finally understood was priceless. Now she's all about adjusting her W-4 to get more money throughout the year instead!
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Julia Hall
ā¢Wait I'm confused. Are people here saying I should be getting less money back at tax time? I look forward to my refund every year to pay off holiday debt. If I change my withholding doesn't that mean I might end up OWING money??
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