Taxes for the Newly-Married

You get no special deal by checking the “married” box.

My parents have a ritual at tax time. After every annual visit to the accountant they book a long weekend at the beach. They’ve been doing this for as long as I can remember. Since we didn’t talk much about money in my house, I’d always assumed that my parents must have gotten some tax windfall each year from sound investments and deductions, and that the mini-vacations were paid courtesy of a large refund.

After my husband and I got hit owing big on our taxes during our second year of marriage, I asked my parents to explain the beach trips. “We are so stressed out and disappointed at tax time that we spend a weekend away together as a reminder that there are more important things in life than money and taxes,” they told me.

After swiftly moving from singledom to marriage, we thought we were finally getting the better end of the deal. A joint income equals more tax deduction equals a big tax return: or so we thought. Without assets like children or property, which you can write off, all that happened as a married couple with a joint income is that we moved into a higher tax bracket. We were so used to paying taxes as single people that we assumed we’d get a return. Why should anything else change? Operating under the delusion that marriage equals tax perks we soon discovered there is no special deal by checking the “married” box.

Our first year was okay. I wasn’t working and so it was only my husband’s income on the tax return. But the next tax year hit us square in the face. I’d started working again and had income to file. We didn’t plan ahead because we didn’t know any better, and we didn’t ask questions before or after we got married. As two people who are fine paying our dues and understand that taxes are a necessary fact of life, we just assumed that what we’d already paid in taxes to the government with each paycheck was enough.

As soon as our accountant turned the computer monitor around and showed us the amount we owed — well into the double digits — our hearts dropped somewhere around our ankles. You could hear the leaves falling outside; the room was totally still. Our accountant had the grace to appear solemn, as though someone had died. In a way something did die: our view of the American Dream.

“You have a couple of choices,” he told us. “You can buy property, or if you are planning on children that will also help. The other option is to start a business. All of these choices will help offset your income and hopefully get your tax payment down each year.”

We stumbled out of his office, stunned. The amount owed would not only wipe out a significant amount of our savings, but we also needed to make serious life changes to avoid paying the government huge amounts of money for the foreseeable future. We drove home in a daze. My husband, only half-joking, offered a potential fourth option: we stay together as a couple but officially divorce and not tell our families. This way we could once again file separately and not owe so much money.

In the eyes of the government, was the benefit to being married? We’d gotten married for us, of course, and not just for tax reasons, but we were still hopeful that at least bureaucratically and financially speaking there was something to be said for becoming partners for life. Is it really true that the only way to escape ruin at tax time is by becoming parents and owning a home? Should one of us just quit our job, would that solve it? According to my parents, there is no magic formula; you can still own a home or have kids and get hit with owing taxes, but these assets help. A lot.

We were now thrust into a 1950s era vision of America that we hadn’t been told ahead of time we’d be expected to conform to (if we wanted a tax break, at least). Clearly the IRS thought we were being selfish. Were we being punished by choosing to be renters and not entrepreneurs and above all, opting to remain childless?

Since children were definitely not in the cards and remaining dual income would be healthier for our marriage anyway, we settled on buying a house. We got an advisor to walk us through pre-approval. We filled out forms. We thought about using our 401(k)s as a down payment. We spent a couple of weekends tooling around neighborhoods and checking out homes for sale. And then came the moment when we both realized that we weren’t ready for this. Buying a house is a big step. It was something we’d talked about before, sure, but we wanted ample time to plan and save for it. Now we were rushing through it all, trying to pull it together to buy within that fiscal tax year so we wouldn’t be hit so hard with income penalties next time.

Everything seemed too immediate. My husband and I thought we were already upstanding, tax paying Americans and now the IRS wanted more. We gave to charity, supported local radio and businesses, and took a vacation once a year; we didn’t live lavishly or spend foolishly and we certainly weren’t rolling in dough, no matter what the government thought. But somehow we found ourselves scrambling to upend our lives and buy property we didn’t really want, or start a business we had no clue how to run. Was this how we were to spend our lives: live in terror and watch as our savings were gobbled up each year?

In the end we took a page from my parent’s post-tax season playbook. First, though, we had to get smarter about saving. And so we conceded that extra money be taken out of our paychecks each month — something we still do that makes a difference. But we didn’t let the IRS ruin our fun. Instead of bemoaning our diminishing savings account, we took what we probably would have paid in closing costs on a house and booked a beach vacation on a much grander scale — in Ireland. It wasn’t necessarily a “Stickin’ it to the man!” moment, but it was close. Then and now, we refuse to be mired by taxes.

I’m sure there are better things we could have spent the money on: investments or building some assets, or saving for retirement. But I think my parents are on to something here. As we stood hand-in-hand in the seaside town of Howth, gazing out at the clear horizon across the Irish Sea– so clear, in fact, we could almost make out Wales — we couldn’t help but believe, “This is what it’s really all about.”

Michelle Brosius is a writer and dreamer. You can follow her @Michelle Brosius

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