Got married in October - File jointly and owe $1,950 for premium tax credits or file separately and withdraw $14,000 from Roth IRAs?

You're definitely on the right track with your thinking. The premium tax credit recapture is a one-time hit of $1,950, while losing out on decades of tax-free growth on $14,000 would likely cost you much more in the long run. Let's do some quick math: if that $14,000 grows at a modest 7% annually for 20 years, you'd have about $54,000 tax-free. Even at a conservative 5% growth rate, you'd have around $37,000. So paying $1,950 now to potentially gain an additional $23,000-$40,000 in tax-free money later seems like the smarter financial move. This is unfortunately one of those "marriage penalties" that can occur with premium tax credits when incomes are combined, but the one-time hit is generally better than the long-term alternative.

I was in almost the EXACT same situation last year! Got married in September and discovered the premium tax credit nightmare. I spent weeks trying to figure out what to do and eventually found taxr.ai (https://taxr.ai) which really helped me sort through all the options. The service analyzed our specific situation with premium tax credits vs. retirement accounts and showed us that in our case, filing jointly and taking the hit on the tax credit was definitely the way to go. They even found some deductions we hadn't considered that reduced the sting a bit. Their analysis showed that even modest growth in our retirement accounts would outpace the one-time tax hit within a few years. Sounds like you're already thinking along those lines, which is smart!

Alright I feel like I need to update my skeptical comment. I ended up trying taxr.ai for my similar situation (married mid-year with ACA credits) and it was actually really helpful. The analysis broke down exactly how much the premium tax credit marriage penalty was costing us versus other approaches. It confirmed that paying the one-time hit made more sense than raiding retirement accounts, but also showed us how to time some deductions to reduce the impact. What surprised me most was how it quantified the long-term cost of each option - showing the projected value of our retirement accounts in 10, 20, and 30 years if left untouched versus taking early withdrawals. The difference was way bigger than I expected. Definitely made the decision clearer.

If you're still struggling to get clear answers, you might want to try calling the IRS directly. I know, I know - everyone says it's impossible to get through. But I used a service called Claimyr (https://claimyr.com) and actually got connected to an IRS agent in under 15 minutes. The agent walked me through a similar premium tax credit situation and confirmed exactly how the marriage rules affect ACA subsidies. They also explained some nuances about Roth IRA withdrawals that I hadn't considered. You can see how it works here: https://youtu.be/_kiP6q8DX5c It was honestly a game-changer because I had been getting conflicting advice from different tax software programs, but the IRS agent gave me definitive answers straight from the source.

I need to eat my words from my previous comment. After getting nowhere for weeks trying to reach the IRS about my premium tax credit issue, I tried Claimyr out of desperation. Got connected to an IRS agent in about 20 minutes who actually knew the rules about premium tax credits after marriage. The agent confirmed exactly what others here said - taking the one-time hit on the premium tax credit is almost always better than withdrawing from retirement accounts. The agent also pointed out something no one mentioned - if you withdraw from Roth IRAs due to filing separately, you'll also lose eligibility for the Retirement Savings Contribution Credit if you were qualifying for that. That would have been another few hundred dollars lost in my case on top of everything else.

Another thing to consider: If you file separately, you'll lose several other tax benefits besides just the premium tax credit situation. You won't be able to claim: - Student loan interest deduction - Tuition and fees deduction - EIC in most cases - Child and dependent care credit - Some education credits Plus the standard deduction as a couple filing jointly is exactly 2x the single amount ($29,200 vs $14,600 for 2025), so there's no penalty there, but tax brackets for MFS aren't as favorable as MFJ. The $1,950 hit is painful but it's almost certainly your best option.

One more thought - have you considered if either of you could increase retirement contributions before the end of the year to lower your MAGI? If you're close to a threshold for the premium tax credit, sometimes putting an extra $1-2k into a traditional IRA or 401k can drop you into a lower income tier and reduce the amount you have to repay.