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Divorce can mean a lower tax burden for some in 2013

On the list of things to dread, filing one's taxes has a revered spot near the top. For Connecticut couples who are preparing to divorce, many have questions and concerns about how their new filing status will affect their tax burden. While there seems to be very little good news on the issue of tax changes, some of the differences coming into play in 2013 may actually benefit certain divorced couples.

A prime example lies in two new taxes that will be levied in connection with the Patient Protection and Affordable Care Act. A tax of 0.9 percent will apply to all wage and self-employment income over a certain threshold. Another 3.9 percent will be added on net investment income earned by certain taxpayers. The threshold for both sits at $200,000 for single filers and $250,000 for married couples. Therefore, if both spouses are high earners, there would be significant savings achieved by filing as single individuals.

Another example is found in the tax rate changes for those Americans who fall within the top one percent of taxpayers. Once taxable income reaches $400,000, a single filer will see his or her tax rate jump from 35 percent to 39.6 percent. A married couple will experience that change at an income level of $450,000. Here again, if both parties were to file as single individuals, significant tax savings could be achieved over filing as a married couple.

It is important to note that the benefits of filing as a single entity only apply to unmarried persons. In other words, couples cannot simply file individual returns to qualify. While these tax changes will not affect the vast majority of taxpayers, they represent expensive adjustments for couples in which both spouses earn higher than average incomes. It seems that the financial ramifications of these changes may make the 2014 tax season a little more pleasurable for some Connecticut spouses who divorce in 2013.

Source: Forbes, "Want To Save On Taxes? Get A Divorce," Tony Nitti, Jan. 22, 2013

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