is obsolete and it is "a raw deal" for some couples according to some economists. Qu'Est- ? what is the tax penalty is marriage and while some couples end up paying more, most married couples receive a lower tax bill. -
Allison Linn " a marriage premium tax talk "." in general, couples with incomes differ -as one spouse working and a stay at home spouse are more likely to get a marriage bonus, [Roberton] Williams said. Those who have similar incomes, especially if they are relatively high, are more likely to pay a penalty. "
Source: Allison Linn. "Look who pays the marriage penalty this year." CNBC.com. 2.25.2014.
Although millions of American couples were affected by the marriage penalty in the code federal income tax, you understand that the tax penalty of marriage and how marriage worth came to be?
what is the penalty tax on marriage?
the difference between what you pay taxes as a married couple and what you would pay as two single people is often referred to as the tax penalty wedding.
more marriage Bonus and penalty Calculator
Read more: How the penalty tax on marriage will cost you
marriage penalty Background
marriage penalty aspect of the federal tax code was built in the federal tax tables. Higher taxes were necessary for a married couple who got the same two individuals. It makes no difference if the couple married filed jointly or separately.From 1913 to 1969, married couples had an advantage when it came to tax on income. However, due 1948 income splitting tax code that many thought was unfair to single, the law was amended in 1969. The increase in tax in 1993 made matters worse for married couples. married people have also taken a hit by targeted tax cuts enacted in 1997.
Before 03, if both spouses earn about the same amount of money, then they found themselves in a slice of 'higher tax and were penalized for being married. In fact, over the difference between what they each earned over the marriage penalty. However, if one spouse earned a good salary, and the other does not, then they were not penalized. The marriage penalty could affect couples in all income brackets, however. A couple who is married may lose earned tax credits on income they had received as singles.
The Congressional Budget Office estimates that in 1996, the penalty tax on the average wedding was about $ 1400, which affected 42% of all married couples. Many believe that some couples choose not to marry because of the tax penalty.
03 Tax Law Changes
In 03, the Assistance Act of Reconciliation jobs and growth tax year 03 reduced the impact of the the marriage penalty on married couples who choose to file jointly on their income taxes. This was done by equalizing the standard deduction for singles and married couples and increasing point of the tax bracket of 15 percent for jointly repository married couples. The marriage penalty still exists for some couples based on their tax bracket.