smart spending

Attention, singles: the true price of love

What happens once you commit
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Come tax time, being married can cost you, says Janet E. O'Herron, a CPA in Deltona, Fla. Although the marriage penalty has been eliminated for couples with lower incomes, it still exists to a degree for higher-income earners.

Imagine two fictional couples. Bob and Mary are single and cohabiting but must file taxes as singles. They earn $50,000 per year each. Bob owns the home.

Bill and Margaret are married, own a home and each earns $50,000, too. Yet Bob and Mary will pay $11,113 in federal taxes while Bill and Margaret, who file jointly, fork over $12,538.

In this instance, the "married couple can only take the itemized deduction, whereas the two single people living in the same home have the added benefit of the itemized deduction plus the standard deduction for the second person," O'Herron says.

Estimated cost: $1,425 in extra taxes for Bill and Margaret.




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