Personal finance is one of the hottest topics on the Internet today. Thousands of blogs, podcasts and apps are at your service to help you cut your spending and invest your savings. If you don’t have time to analyze all that information, there’s one step you can take to save money on taxes: get a divorce.
Three provisions in the federal tax code favor single people over married couples: the Affordable Care Act, the maximum tax rates under the deal Congress made to avoid the so-called “fiscal cliff,” and the PEP/PEASE provisions that phase out the personal exemption and limit itemized deductions.
Under the Affordable Care Act, a single taxpayer earning more than $200,000 pays a 3.8 percent tax on investment income and additional Medicare tax on income over the limit. But if those two taxpayers are married and file a joint return, higher taxes kick in when they earn more than $250,000, not $400,000.
Maximum tax rates also favor single and divorced taxpayers. Higher rates kick in for singles with income of more than $400,000, but married couples pay more when their income hits $450,000.
Finally, limits on personal exemptions and itemized deductions also favor the divorced. Phase-outs for single taxpayers begin when their adjusted gross income is more than $250,000. Two married taxpayers lose these benefits if their adjusted gross income is more than $300,000.
When you file your taxes this year, keep in mind that a Georgia divorce attorney may be able to help you lower your tax bill next year.
Source: “Want to save on taxes? Get a divorce.,” Tony Nitti, Jan. 22, 2013
- Taxes are a consideration for many people contemplating a divorce, as well as for the new reality that exists post-dissolution. This can be especially true in a high-asset divorce. Our firm has a deep well of experience working with the many factors that can be of central importance in a high-end divorce, including asset valuation, property division, tax considerations and other pivotal factors. For more information, please visit our Georgia High-Asset Divorce page.