Tax disadvantage to being married

[Trixie Racer]

On another board there was a thread about whether or not people should get married. I posted that it was a tax disadvantage to get married. The poster replied back saying that the penalty was for "standard deduction", not an actual tax penalty. That didn't sound right so I dug up the 2003 1040 booklet.

This is what I came up with: If you file jointly, there isn't a disavantage. But many people (myself included, if I ever get married) wouldn't want to file jointly. Once you get married, to keep your taxes separate costs extra money. Extra money=penalty.

There isn't a tax disadvantage at all until you reach $57,325/year. However, after that, someone filing "Married filing separately" pays more taxes than someone who is single. The more money you make, the larger the penalty up until a maximum penalty of $6271.25/year. (see below)


Filing Single:
If your line 40 is $28,400-$68,800 you pay $3,910 + 25% on all income above $28,400
If your line 40 is $68,800-$143,500 you pay $14,010 + 28% on all income above $68,800
If your line 40 is $143,500-$311,950 you pay $34,926 + 33% on all income above $143,500
If your line 40 is $311,950 or higher you pay $90,514.50 + 35% on all income above $311,950


Filing Married Filing Separately:
If your line 40 is $28,400-$57,325 you pay $3,910 + 25% on all income above $28,400
If your line 40 is $57,325-$87,350 you pay $11,141.25 + 28% on all income above $57,325
If your line 40 is $87,350-$155,975 you pay $19,538 + 33% on all income above $87,350
If your line 40 is $155,975 or higher you pay $42,194.50 + 35% on all income above $155,975


For someone who makes $100,000/year they would pay $22,746 if single or $23,723.75 if married filing seperately. This equals a tax penalty of $977.75.
For $200,000/year the penalty is $4032.25.
For $300,000/year the penalty is $6032.25
For $400,000/year the penalty is $6271.25
For $500,000/year the penalty is $6271.25
For $1,000,000/year the penalty is $6271.25


So, there is a tax diadvantage if you're "married filing separely" and make good income. The penalty may not seem that high, but why does the government deserve an additional $6000/year in tax money just because you're married?

[Khun]

Hmm, the government is trying to screw us? What is the world coming to?

[wyldblyss]

Wow, sucks to be a married American with a high income. In Canada everyone files individually unless you are married, have no children and your spouse doesn't have an income, then that spouse doesn't have to file at all.

[baddog]

Well, I think they are trying to encourage married couples to file jointly . . . don't think there is much of a secret as to why that would be.

Up until a few years ago there was a higher tax rate for married couple. Luckily, back in the day when I was married there were tax advantages to filing jointly,

[AndrewKanuck]

And if you're divorced, you get fucked by paying 50% to the ex, and then 25% to the guv, HOURRAY.

[Trixie Racer]

Originally posted by egonetworks
And if you're divorced, you get fucked by paying 50% to the ex, and then 25% to the guv, HOURRAY.

That's why EVERYONE should sign a prenuptial agreement before getting married.

[Lace]

Fuck this gov't...I hate it....Why should we honest working americans pay for these stupid mother fuckers on welfare and all this section 8 house...police that bust our ass for everything, and so on.....fuck that..im going tax free

[woj]

That's messed up, there is no logical reason why a married person should pay more in taxes....

[rowan]

Hmmm, reminds me that I need to look up stuff like this. I was married within the current financial year so my situation has changed since my last return.

I'm in AU and our tax year ends in 3 days!!!

[kane]

but if you are like most people and only use the standard deduction there can be a tax advatage for marrige. If you are single you get the standard deduction. If you are married you get twice the standard deduction regardless if your spouse works or not. I have two friends that are married and only take the standard decutions ( no home or enough of anything else to write off yet )

one's wife works and actually makes more than him so they should get the standard deduction ( twice that of a single person)

the others wife doesn't work and he still gets twice the single deduction. They lived together for 2 years before getting married and she didn't work for most of that time ( long story ) and during those years he only got the singler person deduction so when they got married he instantly got an additional 6K+ in deductions.

[Trixie Racer]

Originally posted by kane
but if you are like most people and only use the standard deduction there can be a tax advatage for marrige.

Kane, you're talking about "married filing jointly". Standard deduction vs. itemized decuctions wasn't the point of my post. But since you brought it up -- there is no tax advantage for someone who's married if they file separately. This includes for standard deduction. In 2003 the standard deduction was the same whether you were single or "married filing sperately" -- $4,750. Married filing jointly gets a $9,500 deduction, which would only be an advantage if one spouse doesn't work and they didn't own a house (or have any other driving force to encourage itemizing with a schedule A form).

Anyway, as I stated in my original post, the tax disadvantage is when filing separately. There is no point debating who gets what deductions because the numbers I stated are for taxes due AFTER all deductions.