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The Guy Behind the Tree
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Category: Tax
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have recently come into about 750000 dollars that I have ...

Customer Question

have recently come into about 750000 dollars that I have won from a lotto scratch ticket. My question is that I really want to get married but I am not sure if that is a smart idea. Should I wait till the new year and have all the tax on me or would it spread out to the two of us if we got married? Or does it not matter?
Submitted: 8 years ago.
Category: Tax
Expert:  The Guy Behind the Tree replied 8 years ago.
Congratulations on your winning ticket.

Perhaps your winnings will be paid in one lump sum this year. Your tax bracket will, of course, be the maximum, and there will probably be tax withheld from your winnings. You will file your return and you will owe whatever the total tax bill will be.

Whether or not you are married will have little impact on your total tax bill. The bracket will not be changed, whether or not your spouse has income of their own.

Perhaps, on the other hand, your winnings will be paid over a number of years. For estimating purposes let's assume 20 years, or $37,500 annually. The only difference in your tax situation (Scenario 1: marry this year; Scenario 2: marry next year) would be for THIS year's taxes on $37,500 since either way you would be married next year. The difference in your taxes this year on the first year's annual payment would be relatively minimal whether you are married or single.

From this I think whether your payout is lump sum or annual, it really doesn't matter that much whether you marry this year or next year.

Conclusion: don't make your marital decision (or, in general, most business decisions!) based on tax considerations. Make the right decision for the most important and relevant reasons.

Hope these thoughts help.
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Expert:  The Guy Behind the Tree replied 8 years ago.
Thanks for Accepting, no need to Accept again.

Just so you know, if the payout is annually, and if you both had no other income this year, there is about a $5,000 difference in your tax bill for the first year - in favor of "married filing jointly". For other combinations of income the difference would be less.

In the overall scheme of things, that alone to me is not a compelling reason to drive your marital decision... and given your lottery win, even less compelling.

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