My wife and I (both 30) were married in 2012 and I make 200k+ while my wife makes around 70k. We filed jointly for the first time, and we each always get a refund on our annual filings. I was under the impression that being married would benefit us if anything, but we had to pay about 8,000 in additional taxes.
I realize that marriage tax benefits kick in when we buy a house (mortgage), and we currently rent (thus I expected any benefit to be rather modest). I also had a capital gain of about 10k (from stock sales), however only expected a 2k (20% LT Capital Gains) tax hit on this. We have no children, and there are no other variables that should affect this. We have a long time financial adviser who does our taxes, who I trust quite a lot, however it seems crazy to owe so much simply from getting married. She told me that because my wife now moves in to a higher tax bracket, that is the reason for the deviation, and that this year we should manually withhold more from her paycheck. Seems to me that it would have been financially beneficially to have had a wedding, but to not have been legally married given the big tax hit (~6k netting out the CG tax which was expected)...I saw that somewhat jokingly as I'm sure how family would not like that, ha. Plus we still use separate insurance. My question is, does it make sense to get a second opinion on our taxes, or does it seem normal to this significant tax hit post-marriage given our polarized salaries?
Your financial advisor is essentially correct. Comments on the specific amounts would require more information, but here is what is going on...
What you are experiencing is caused by the fact that your employers don't know about each spouse's income. We'll use your wife's income as an example. The taxes on your wife's income should be withheld starting at your marginal tax rate since her income adds to the couple's income. But, since your wife's employer doesn't know about your income, the withholding is calculated based on her income alone. So, the result is under withholding. I find the same problem with a lot of the retired Senior Military Officer's that come to me. In their case their withholding in their new career doesn't account for their retired pay.
You will probably want to adjust your withholding.
That doesn't mean there isn't anything you can do to reduce the tax bite. Look at your options for 401(k), 403(b) or Traditional IRA contributions. With your income, they will be heavily "tax subsidized". Also make sure you are investing in a tax efficient manner. Talk to your advisor about that.
Hope this helps.
First, congratulations on your wedding!
Second, you are not alone. The first year that newly marrieds file a joint tax return can be a shock. You have experienced what is commonly referred to as the "marriage penalty", which hits two working couples when they file jointly. While the tax brackets for married couples are more generous than for single taxpayers, that is only true when there is one spouse working. Once you have two incomes added together you typically wind up in a higher tax bracket than you would if you were both able to file as single.
You should sit down with your advisor and do a little tax planning. As Curt said there are probably some things you can do to relieve the tax bite. Your advisor should be able to help.