How to Avoid the Marriage Tax Penalty if You Sign Up for Health Insurance Through the ACA

It’s a common misconception that getting married always means you’ll pay more in taxes. However, there are some situations where getting married can actually save you money on your taxes, especially if you sign up for health insurance through the ACA.

How the ACA Marriage Penalty Works

The ACA marriage penalty is a provision in the Affordable Care Act that can result in higher taxes for married couples who file jointly if one spouse has a much higher income than the other. The penalty is calculated based on the difference between the couple’s joint income and the income of the spouse with the higher income.

How to Avoid the ACA Marriage Penalty

There are a few ways to avoid the ACA marriage penalty if you sign up for health insurance through the ACA.

File separately. If you file your taxes separately from your spouse, you will not be subject to the ACA marriage penalty. However, you may lose out on some other tax benefits, such as the child tax credit and the earned income tax credit.
Claim the head of household filing status. You may be able to claim the head of household filing status if you are married but live apart from your spouse for the entire year. This filing status can help you reduce your taxes, even if you do not have children.
Contribute to a health savings account (HSA). HSAs are tax-advantaged savings accounts that can be used to pay for qualified medical expenses. If you contribute to an HSA, you may be able to reduce your taxable income, which can help you avoid the ACA marriage penalty.

Additional Tips for Avoiding the ACA Marriage Penalty

In addition to the three main ways to avoid the ACA marriage penalty, there are a few other tips you can follow to reduce your taxes if you are married and have signed up for health insurance through the ACA.

Make estimated tax payments. If you think you will owe more than $1,000 in taxes for the year, you should make estimated tax payments to the IRS. This will help you avoid penalties when you file your taxes.
Get help from a tax professional. If you are unsure how to file your taxes or if you think you may owe the ACA marriage penalty, you should get help from a tax professional. A tax professional can help you determine the best way to file your taxes and minimize your tax liability.

Conclusion

The ACA marriage penalty is a complex issue, but there are a few things you can do to avoid it if you sign up for health insurance through the ACA. By following the tips in this article, you can reduce your taxes and save money on your health insurance.