Re: trying to understand the "marriage penalty"


<onehappymadman@xxxxxxxxx> wrote
Paul Thomas, CPA wrote:
<onehappymadman@xxxxxxxxx> wrote
The husband works as a professional; the wife stays home. Taxes are
filed "Married filing jointly".

The wife finds an entry level job at Target. Taxes are still filed
"Married filing jointly".

How would the marriage penalty apply in this case?


Any time that the joint income is taxed at a rate greater than the same
income if filed by a single person, that is when the impact of a marriage
penalty can be seen.


I must be missing something obvious here. How can MFJ income be taxed
at a rate greater than the same income if filed by a single person?



I probably didn't state it clear enough. If the rate of tax on the wife's
income is higher filing jointly with her husband than if she were single
earning the same income, then the marriage penalty is rearing it's head. It
was a time when two single people making say, $30,000 of taxable income were
taxed at a lower rate than if they married, filed jointly and were taxed on
$60,000. The total taxes were higher filing jointly (after getting married)
than if they stayed single, lived together, and filed as single.




Here are some tax schedules I found on google:
http://www.irs.gov/formspubs/article/0,,id=133517,00.html

The tax rates for MFJ look much more favorable than for Single...


Currently, the joint tables, standard deductions (and others) are exactly
double for a MFJ than for single. In some cases MFS is the same as the
single amount (but not always.)




--
Paul Thomas, CPA
paulthomascpapc@xxxxxxxxxxxxx


.

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