Tax disadvantage to being married
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?
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?
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