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One More Marriage Penalty for Taxpayers

  • April 4, 2018

Here’s a new reason to just cohabit – if you and your loved one have a huge mortgage.

If you or your clients happen to be blessed as a high-income couple, it’s likely your taxes will go up. Your combined income might require you to pay a higher federal tax bill than would’ve been owed had you stayed single.With a change in IRS rules last year, an unmarried couple can deduct twice as much of their mortgage- and home-equity-debt interest than a married couple can.

In a court case that they lost, the IRS was forced to agree that the limits on deductions for mortgage interest – $1 million of mortgage debt plus $100,000 in home-equity financing – apply on a per-taxpayer basis, not a per-residence basis. So, a married couple is considered one taxpayer; an unmarried couple, two. That means an unmarried couple could deduct interest on a combined $2.2 million of mortgage debt.

About the Author Larry Heinkel J.D. LL.M

Larry Heinkel is a tax and bankruptcy attorney with more than 38 years experience helping businesses and individuals, solve their state and federal tax problems. Mr. Heinkel has been extremely successful in representing his clients before IRS and DOR, and is known throughout Florida as an expert in tax problem resolution.

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