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jerseyeng
New Member

I got a new job in August of 2022. It is $50,000 more than what I was making at my last job. I am now new tax bracket, was 24% now 32%. How can I maximize my deductions?

I also gained a domestic partner mid-year and have put them on my benefits at the new company. How should I claim them?
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4 Replies

I got a new job in August of 2022. It is $50,000 more than what I was making at my last job. I am now new tax bracket, was 24% now 32%. How can I maximize my deductions?

@jerseyeng for federal tax purposes, if that domestic partner earns more than $4300, you can not claim the partner as a dependent; there is no benedit available.   if the partner earnes less than $4300, it is possible to claim but they would have had to have been living with you ALL YEAR and you would have to be providing more than 50% of the household expenses.  State rules may be different (e.g. California).

I got a new job in August of 2022. It is $50,000 more than what I was making at my last job. I am now new tax bracket, was 24% now 32%. How can I maximize my deductions?

for federal income tax purposes, the term spouse includes an individual married to a person of the same sex if the couple is lawfully married  reg 301.7701-18. however, individuals who have entered into a registered domestic partnership,civil union, or other similar relationship that is not considered a marriage are not considered married for federal tax purposes. 

 

(b) Persons who are lawfully married for federal tax purposes -

(1) In general. Except as provided in paragraph (b)(2) of this section regarding marriages entered into under the laws of a foreign jurisdiction, a marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by the state, possession, or territory of the United States in which the marriage is entered into, regardless of domicile.

(2) Foreign marriages. Two individuals who enter into a relationship denominated as marriage under the laws of a foreign jurisdiction are recognized as married for federal tax purposes if the relationship would be recognized as marriage under the laws of at least one state, possession, or territory of the United States, regardless of domicile.

(c) Persons who are not lawfully married for federal tax purposes. The terms spouse, husband, and wife do not include individuals who have entered into a registered domestic partnership, civil union, or other similar formal relationship not denominated as a marriage under the law of the state, possession, or territory of the United States where such relationship was entered into, regardless of domicile. The term husband and wife does not include couples who have entered into such a formal relationship, and the term marriage does not include such formal relationships.

 

 

 

 

 

these states allow additional filing statuses for same-sex couples:

California
Connecticut
District of Columbia
New Jersey
Oregon
Vermont

I got a new job in August of 2022. It is $50,000 more than what I was making at my last job. I am now new tax bracket, was 24% now 32%. How can I maximize my deductions?

Generally, you have the same tax deduction opportunities as everyone else; a mortgage, donations to charity, pre-tax contributions to an IRA or workplace plan (401k, etc.)   There are whole books about the subject.

 

Regarding your partner, for federal tax purposes, if your partner is not your legally married spouse or your tax dependent, then the value of benefits provided to them are considered additional taxable income to you, even if you never see the cash.  This is called "imputed income."  For example, suppose that single medical insurance is $500 per month, with the company picking up $400 and you paying $100,  That $100 is a pre-tax deduction.  Now suppose family insurance is $1000 per month, with the company picking up $800 and you paying $200.  The $400 company share for your partner is considered additional taxable income on your pay and W-2, even though you never see it, and the $100 share you pay for the partner's insurance is deducted from your check after tax, not before.  The only way to make this go away is to marry your partner, marriage is a "qualifying event" that allows you to change coverage outside the normal open enrollment period.  But even then, you don't get the tax advantage retroactive to the beginning of the year, only from the date of the marriage going forward.

 

In states that recognize a special status for domestic partners, you would have to research whether there is an adjustment or deduction allowed for the cost of company-provided benefits.  It would be part of the state-specific adjustments in Turbotax, if it was there.  

I got a new job in August of 2022. It is $50,000 more than what I was making at my last job. I am now new tax bracket, was 24% now 32%. How can I maximize my deductions?

Also, remember that the 32% rate only applies to your income that is above the top threshold for the 24% bracket.  The higher rate does not apply to all your income.

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