Single vs Married Tax Withholding – What’s the Difference?

Single vs Married Tax Withholding

Tax withholding is a fairly straightforward concept. However, when you dig into the details, it can get complicated.

At a basic definition, tax withholding refers to the amount of money that your employer withholds from your paycheck. They send that to the IRS. When you do your taxes in April, you may find that you still owe more money. On the other hand, you may find that they’ve been withholding too much, and that’s when you get a tax refund.

There is a difference between single vs. married withholding for taxes. It’s worth learning about.

Take a Look at Tax Form W-4

When you get a new job, you fill out a bunch of paperwork. The W-4 tax form is probably in that pile. This is the Employee’s Withholding Allowance Certificate. It tells your employer how much to withhold.

The information is straightforward at first glance. However, pay careful attention to Box 3. It asks for your marital status. You can choose single or married. However, you can also choose “married, but withhold at a higher single rate.” In other words, even if you’re married, it might make sense to choose the higher rate.

Married Tax Withholding is (Usually) a Lower Amount

So, what’s the difference? Put simply, married withholding means that less money will be withheld by your employer than if you chose single withholding.

Why? The primary reason is that married people generally will have more exemptions. As a result, they tend to owe less in taxes. Therefore, it’s not necessary to send as much to the IRS through withholding.

It’s often preferable to have more withheld rather than less. That way you get a tax refund each year, rather than owing money. Therefore, some people choose the option to withhold at the (higher) singles rate even though they are married.

Withholding Tax is Different for Singles vs. Married

The amount of money that you owe at tax times depends upon your income tier. However, that amount differs for singles vs. families.

For example, at the very low end, you do not owe any tax withholding if you are a single who earned less than $308 per month in 2018. If you’re married, then that number climbs to $963. In other words, you can earn $600 more as a married person and not have to send anything for withholding tax at that income tier.

Up at the higher levels, let’s say that you earn $164,000 per year. If you are single, then you will pay 32% of that to income taxes. Therefore, you’ll want a comparable amount of tax withholding so that you don’t owe money come tax time. On the other hand, if you’re married and earning $164,000, then you will only have to pay 22% of that to taxes. Therefore, you can have less withheld from your taxes.

If you are married, you also have the option to choose “married but filing separately.” In that case, you’re back to looking at the numbers comparable to those for filing as a single. Therefore, most people find it financially beneficial to file together if they are married.

Get on the Same Page as Your Spouse for Married Withholding

Clearly, getting married has some potential financial benefits. However, you and your spouse need to be on the same page. In particular, you should discuss what your individual W-4 forms look like. You may each be taking allowances on the form that change your withholding amount. You need to coordinate that.

Luckily, the W-4 form comes with lots of extra information. With married tax withholding, you want to look for the Two-Earners/Multiple Jobs Worksheet. (You can also use this as a single person who has more than one job.) As you fill out the paperwork, you’ll get a sense of which partner should take which allowances to make the tax withholding benefit your whole household.

As a general rule, the IRS suggests that the higher-paying job claims all withholding allowances. However, that might not work for your situation. As long as you and your spouse get on the same page, the decisions are up to you.

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