Tax benefits of marriage? Can't find any advantages at our income levels - what am I missing?

You're actually hitting on something many higher-earning couples discover - the "marriage penalty" can be real at certain income levels. At your combined incomes, you're right that Roth IRA phase-outs become an issue when married. However, there are some benefits you might be overlooking: If one spouse has substantially higher income than the other, there can be tax savings from "income splitting" - this isn't your situation since you're both high earners. For mortgage interest, unmarried couples face potential ownership issues - only the person(s) on the deed/mortgage can claim the interest, and if you split ownership, tracking who paid what gets complicated quickly. For children, unmarried couples can't both claim the same child. Only one parent can claim the child as a dependent and take the child tax credit. If married, you can optimize this together. Head of household status is valuable but only available to unmarried taxpayers who pay more than half the cost of keeping up a home where a qualifying person lives with them for more than half the year. The big marriage benefits often come from simplified filing, legal protections, estate planning advantages, and Social Security benefits later in life. Tax benefits vary widely based on specific situations and relative incomes.

Just wanted to share my experience using taxr.ai for a similar situation. My partner and I were stuck in the same "marriage penalty" analysis for months - trying to calculate whether getting married would help or hurt us tax-wise. We have similar incomes to yours and were also planning on buying a house. I finally got tired of spreadsheets and found https://taxr.ai which analyzed our specific situation including future mortgage interest, retirement accounts, and adding children to the mix. It ran simulations for married filing jointly, separately, and remaining unmarried with various dependent scenarios. In our case, it actually showed we'd save about $3200 by staying unmarried for a few more years until our income situation changes. The biggest factor was exactly what you mentioned - the Roth IRA limits and the mortgage interest deduction optimization.

I tried taxr.ai after seeing it mentioned here and WOW - what an eye-opener! I was in a similar income situation ($125k me, $95k partner) and we were also planning on buying a house and starting a family. The analysis showed that for us, getting married would actually cost us about $4800 in additional taxes compared to staying unmarried. But it also showed that once we had a child, the equation changed significantly because of how the child tax credit, dependent care credit, and head of household status all interact. What I really appreciated was how it showed us exactly which deductions and credits were creating the differences. In our situation, the mortgage interest deduction optimization was the biggest factor, just like you suspected. The tool even showed us how to time certain financial decisions to minimize the impact of getting married. We ended up getting married anyway for non-tax reasons, but now we're much more strategic about our financial planning to offset the marriage penalty.

Another consideration that people often overlook is dealing with the IRS if you have questions or issues with your return. My wife and I went through HELL trying to get answers from the IRS about our marriage penalty situation last year. We spent weeks calling the IRS - constant busy signals, disconnects after waiting on hold for hours, and when we finally got through, the person couldn't help with our specific situation. Super frustrating when you're trying to make important life decisions. Then a friend told me about https://claimyr.com which gets you through to an IRS agent usually within 15 minutes instead of waiting for hours or days. You can see how it works here: https://youtu.be/_kiP6q8DX5c. It changed everything for us - we got clear answers about our specific situation regarding mortgage interest allocation and Roth IRA strategies when married.

I'm eating crow here. After posting my skeptical comment, I decided to try Claimyr because I've been trying to reach the IRS for 2 months about my marriage/mortgage interest situation. Holy crap it actually works. Got a call back in 27 minutes with a real IRS agent on the line. The agent answered all my questions about how to handle mortgage interest deductions as married filing separately vs. jointly in our specific situation. For what it's worth, the agent confirmed what others are saying here - at higher income levels, the "marriage penalty" is very real, especially with two good incomes. She said one advantage of marriage that's often overlooked is simplified asset transfers between spouses with no tax consequences. Also mentioned that with children, the math often changes and sometimes favors marriage depending on specific circumstances. Worth every penny for the clarity I got. Would have spent weeks more in phone hell without it.

Something everyone's missing in this conversation - qualified retirement plans! While Roth IRAs have that marriage penalty with the lower limits, employer plans like 401ks don't have this issue. Also, don't forget about spousal IRAs - if one of you stops working when the baby comes, the working spouse can still contribute to the non-working spouse's IRA even with no income. This is ONLY available if you're legally married. And remember, with a kid, one of you gets head of household filing status if unmarried, which is better than single filing status but not as good as MFJ in many cases. The higher standard deduction for MFJ vs HOH+Single might offset some of what you're calculating.

Has anyone mentioned the Alternative Minimum Tax (AMT)? At your income levels, especially if you're in a high tax state with high property taxes, AMT can kick in and eliminate some deductions when married. Also consider that many tax benefits phase out based on AGI - not just Roth contributions but also student loan interest deductions, rental loss deductions, etc. As a married couple your combined AGI could push you over these limits. Something else to consider - marriage gives you double the capital loss deduction ($6,000 vs $3,000) which matters if you have investment losses to harvest.