What are the marriage penalties/rewards in ER?

[cute fuzzy bunny]

Sooo...since I'm strapping on the tuxedo this august, anyone thats been married in ER or become married after ER have any pointers on any investment/tax/financial changes for better or for worse, in sickness and in health...whoops.

I'm looking for this info myself, but maybe y'all already know.

For example...I have some capital losses...can I use them to offset her capital gains if we're 'married filing jointly'? Since I have little to no net taxable income, am I better off doing us separately or can I use my low tax status to drag her taxabiliy costs down? I cant open or contribute to a roth because I have no 'earned income'; can I do so as a married 'couple' where she does have earned income?

What other little "goodies" have y'all "discovered"?

 

[malakito]

For example...I have some capital losses...can I use them to offset her capital gains if we're 'married filing jointly'?

Yes, as long as you get married by the end of the year in which she realizes the capital gains and file MFJ.

Since I have little to no net taxable income, am I better off doing us separately or can I use my low tax status to drag her taxabiliy costs down?

You're probably better off filing MFJ than MFS unless you live in Ohio or if the lower earning spouse (I assume that's you) has significant medical expenses or investment expenses. However, the standard advice is to run the numbers both ways and file whichever results in a lower tax liability.

My understanding is that with the current tax structure, MFJ results in a lower overall tax bill than your individual tax burdens when one spouse earns significantly more than the other (i.e., a marriage "bonus"). There is a "marriage penalty" when both spouses earn about the same, mostly because the incomes "stack", so the first dollars of the second salary are taxed at a higher rate.

I cant open or contribute to a roth because I have no 'earned income'; can I do so as a married 'couple' where she does have earned income?

Yes, you can, provided that your and her total IRA contributions don't exceed her earned income. Look up "spousal IRA" at www.irs.gov.

malakito.

 

[malakito]

What other little "goodies" have y'all "discovered"?

With respect to marriage, I'm not sure. I got married long before I looked into ER -- marriage was in 1991, ER bug bit in maybe 1998.

On another front, running a small home business can generate some nice deductions, but then again, that's work ;-)

malakito

 

[cute fuzzy bunny]

Thanks Malakito. Except for that four letter word you used in the second post.

Anyone else have any insights?

I'll run the numbers both ways, but wanted to know up front if there are any surprises. We're going to sell her house eventually but if we wait more than 2 years it'll be a taxable gain as she wont be living in it. So we might want to sell it sooner, and if we dont, Its good to know that I can use my losses to offset her gains.

 

[malakito]

...more than 2 years...

I *think* you mean 3 years. The rules are she has to own it and live in it for 2 of the past 5, I'm pretty sure.

malakito

 

[cute fuzzy bunny]

Yep I think you're right.

We were thinking of moving some family members into it for a while, but they're not that interested. I dont feel like being a landlord. We cant sell it right now for what, to some, might seem like a stupid reason.

The neighborhood stray dog started coming around and playing with ours when we got them 4 years ago. After a year or so he let the wife touch him, a year later he let me. Now he lives in the side yard full time and we've been feeding him since. I have practically no chance of getting him in the car and if I did and brought him to my new house, he's already shown the ability to climb over a 6' wood fence and I doubt my new neighborhood would be as tolerant of him as the old one, plus he wouldnt know where he is.

So believe it or not, the sale of a $150-170k house hangs on a dog. We wont abandon him.

Crazy where things leave you.

 

[John Galt]

We have four (4) dogs which limits our options
severely. After we bought our Texas condo in
March, I stayed there a time or two before we
leased it out. Once I called my wife and said
"I love this place. Let's shoot the dogs and move here!"
Her response? "Okay!" Alas, we couldn't do it and thus
are stuck for now......................

John Galt

 

[yelnad]

Dogs are great. We sold our last house and bought the new one because of our two beasts. They needed more room to run and the older one needed to be on the ground level whenever she exited an exterior door. In the new house, she can do that on both levels. Our deck even has a ramp...the things we do for them.

 

[John Galt]

Yep , the things we do for our dogs. My lab came down with some minor ailments the other day. One quick stop at the vet was $100. My previous lab was kept alive until age 14 by "heroic" and expensive methods.
I love this one just as much but would not go to the same lengths to keep her going. Regarding marriage and ER, can you spell "prenup"?

John Galt

 

[Martha]

One of our dogs is on doggy prozac. It costs about $40 a month. Poor baby is scared of everything.

The other older dog has a bad back. We made a ramp up to the couch. Poor baby can't sleep on the floor.

Marth

 

[cute fuzzy bunny]

One of mine has an acl tear in a hind leg thats going to need surgery some day.

I have one of those beds that you have to hop up to get on, and she was having a heck of a time getting up on it.

One more good use for a reciprocating saw...

 

[John Galt]

Hello TH. Re. "reciprocating saw", is that for use on the
bed or the dog?

John Galt

 

[cute fuzzy bunny]

Gee, leave something to the imagination and look what happens.

For the bed!

It has a huge wood frame that stood up on legs about 20" long, and the box spring was suspended up inside of it.

I cut off the legs, removed the wood suspension system, and made what almost looks like a platform bed out of it. The mattress is now about 25" lower than it was.

Fully reversible should I decide to do that.

The one downside is that the bed is now an extension of the floor to the critters and any game of "chase me" is now conducted with the bed as part of the "route"...

 

[gayl]

 I cant open or contribute to a roth because I have no 'earned income'; can I do so as a married 'couple' where she does have earned income?

What? You haven't convinced her to ER??

 

[cute fuzzy bunny]

Nope she wont do it. Loves her job. Wants to work "as long as I'm able". Probably helps that she only works 3 nights a week with just a couple of other people that she enjoys working with.

Between the consolidation of goods and "gaining an income" I guess its ok with me too. I'll just have to go watch "Mr. Mom" again.