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Updated almost 8 years ago on . Most recent reply
She's a high wage earner, I'm an investor. Tax issues?
Hello all. I have a question my fiancé and I have been mulling for a few months. We want to get married but neither of us are so enamored with the idea that we're willing to take a huge tax hit over it. But we just aren't too clear what the tax penalties would be. She earns enough in her W2 job that if we file jointly it will severely limit (or eliminate completely) what I'm able to expense on my rental properties. I also have a W2 job so our combined W2 income and my passive income also make the AMT a factor. Real problem to have right? I know. I'm not complaining but I would like to hear what the BP community has to offer by way of your own personal experience or even professional advice.
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AMT will impact your schedule A deductions such as real estate taxes on your primary residence. It will not impact your Schedule E deductions. Higher income will remove your opportunity to take the up to 25 k loss against ordinary income but if you aren't currently using that loss then your tax situation relative to your rental real estate will continue on. You will get pushed to a higher tax bracket overall when you combine incomes.
However, possible real world positive implications would be using your wife's name/income to qualify for some of your mortgages increasing the number you can have, or boost your buying power on a mortgage you both cosign. I feel like that would outweigh possible tax impacts.
Finally, AFTER April 17th, any CPA would be happy to run your 2016 tax numbers as though you were hypothetically married to show you the actual tax impact (consider their fee wealth & tax planning, which it is). Seriously though, don't ask anyone to do this for the next 3 weeks ;).