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Ready for Taxes After Marriage? Here’s What You Need to Know

The 2018 tax season is officially over. Most Americans are happy to have their tax returns in the rearview mirror. After all, nobody really enjoys doing taxes. Why is that? For the most part, it’s because doing taxes is such a complicated, frustrating experience for the majority of taxpayers. In fact, it’s can be such a huge pain for so many individuals that they don’t really care if they get the maximum amount back. They just want to get them done.

The Process Is Too Much Work
The problem is Americans are actually laving billions of dollars on the table every tax season. So why would hard-working people not claim all the money that’s rightfully theirs? The answer: they don’t want to spend the necessary time it takes to itemize their deductions. Therefore, common deductions like charitable donations and mortgage interest payments that could save taxpayers thousands go left unclaimed.

Taxpayers Are Missing Out
First off, it’s hard for many people to keep track of these and other deductions. Secondly, it can be difficult to figure out how these deductions work when you file your return. According to a study by the National Bureau of Economic Research, about 30 percent of taxpayers in the US itemized their deductions last year. For the most part, these taxpayers did not itemize because the standard deduction amounted to more than their itemized deductions. However, there are many who are missing out on larger returns if they chose to itemize.

Not Worth the Trouble
In fact, according to the study, in 2016 for example, “there were far more households who itemized amounts close to $12,000 than close to $7,000.” The researchers say that doesn’t make sense because there are many more people who would be closer to $7,000 in itemized deductions than there are with $12,000. So, the researchers concluded that these households simply chose not to itemize because it was such a pain to go through the process. So instead of getting a larger refund, they chose the easier route just to get their return done.

Hundreds of Dollars Per Household
So how much is the typical household willing to give up for the sake of avoiding the pain of itemizing? According to the researchers, they estimate that the average household is giving up between $200 and $600 simply to avoid the hassle. The researchers estimate that the total cost of doing taxes in recent years was more than $200 billion, or about 1.2 percent of the GDP in the U.S.

Itemizing Could Be Even More Scarce
There might be some good news for those taxpayers that prefer not to itemize. With the recent tax reform put in place, the standard deduction has nearly doubled, meaning most people will no longer have more in itemized deductions than they would get if they took the standard amount. Thus, itemizing will likely become even less common in the coming years.That should mean less time and money is wasted on filing tax returns.

The post Ready for Taxes After Marriage? Here’s What You Need to Know first appeared on Advisors to the Ultra-Affluent – Groco.


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