Experts say fiscal cliff could impact Valley couples
FRESNO, Calif. (KFSN) -- Experts warn failure to come up with a compromise on the so-called "fiscal cliff" would have widespread ramifications.
One of the provisions set to expire would impact couples who will pay higher taxes than their single counterparts.
Saying "I do" is supposed to lead to happily ever after. But if the so-called marriage penalty returns, being part of couple could also cost you more in taxes.
"If that goes away, you're looking at a decrease, depending on who you talk to, of about two thousand dollars a year in deductions," financial advisor Sandy Brown said.
Here's what the so-called marriage penalty means. Under Bush tax cuts, married couples automatically get a standard deduction that's double that of an individual tax filer.
Next year, that would be about 61 hundred dollars for a single person. To be equal a married couple would have to get about $12,200. But if no extension is approved, married couples would only get a standard deduction of about $10,150.
Fresno Financial Advisor Sandy Brown says that's just one way couples could be impacted if congress fails to act.
"That could trigger being accelerated to the next tax bracket sooner than it would be for an individual as well. And in the economy we're dealing with now, people are kind of watching everything that happens. Any mention of an increase in taxes is always challenge," Brown said.
With so many ifs, Brown recommends talking to a tax professional about how to navigate your family's tax situation so you are prepared, regardless of what congress decides.
And again, the return of the marriage penalty is just one of the ways americans could be affected, if a compromise isn't reached.
The fate of the mortgage interest deduction is also in question.
Brown says if people can no longer deduct the interest paid on their mortgages it wouldn't just affect their pocketbooks but also the mortgage industry as a whole.
local, amanda perez
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