Please don’t think I’m questioning my relationship or my life partner. Mr. Ms. Liz is truly my best friend; he makes me a better person. There’s no one I’d rather have along side me in this adventure of life. We’ve created a life, together, I could not have created without him by my side.
But that doesn’t mean I won’t examine what marriage has cost us . . . financially speaking.
First, some history. I was married at 24–crazy and amazing that I found the person who would make me happy over these last 28 years at such a tender age.
When I married, I changed my name. Mr. thought it was unnecessary to do so but I wanted to be MARRIED and changing my name made me feel MARRIED.
In fact, Mr. wasn’t all fired up to be married, he was perfectly happy to cohabitate. Smart guy. But, I wanted to be MARRIED and he wanted me to be happy so we were married. And we’ve been quite happy.
My frequent readers know we keep our money completely separate. I never thought we needed to combine finances in order to feel MARRIED.
For the first 25 years of marriage, we split our house related bills based on our incomes. When Mr. made twice what I did, he paid 2/3 and I paid 1/3 toward these bills. As my income grew, I paid more. This allowed us to live at a blended lifestyle rather than at the lower earner’s (mine) lifestyle. Over the last few years, we have split our house related bills based upon our relative net worth. Again, he pays more than I do because his net worth is higher. This has always worked well for us. We’ve always split groceries and other joint purchases evenly.
Because we keep our money separate, I’ve always split our income tax bill based on what we would have paid if we were single.
You see, the U.S. tax code is set up for a family where there is a high wage earner and a low or no wage earner. The tax code penalizes families where both partners have similar or high earnings. This additional tax cost is referred to as the “marriage penalty”.
The penalty exists because the upper earnings limits for the married filing joint tax tables are not two times the limits in the single tax tables.
Then, at higher income levels, an alternate minimum tax kicks in which makes the marriage penalty even worse. Oh and Obamacare added some pesky charges when your income is quite high and we hit that.
And because I am a strange money nerd who looks at this stuff, I can tell you how much marriage penalty we’ve paid over the last 22 years.
In the highest year, our marriage penalty was over $7,100. Yep, $590 a month not for a car payment or a fancy trip but for the privilege of being married. Continue reading “The High Cost of Marriage”