Hello Katz - Here Are Your Articles for Thursday, May 02, 2019
Is this email not displaying correctly?
View it in your browser .
Website Industries Resources Services About Us Contact Us
Share Save

What Is the Marriage Penalty?


The Tax Cuts and Jobs Act affected a variety of calculations, and the tax liability differences between married and single taxpayers is a complex story. As the Tax Foundation notes: "One unintended feature of the United States' income tax system is that the combined tax liability of a married couple may be higher or lower than their combined tax burden if they had remained single. This is called the marriage penalty or marriage bonus."

Depending on your income, the credits or deductions you can use and where you live, you still could pay higher taxes by getting married. It's more typical for newlyweds to see a marriage bonus, but there are tax provisions that are not adjusted for marriage.

Before the new tax law, a larger swath of taxpayers faced higher tax bills after marriage. But when two people with identical or similar incomes get married, the tax code still can cause married couples to owe more than had they remained single.

For single filers, the top federal tax rate of 37 percent applies for those with incomes of more than about $510,000. For married couples, the rate is applied to income over about $612,000. Here's a possible scenario: two single filers in the 35 percent marry and combine their incomes for a total $1 million will pay 37 percent on the portion of their income that slips into the top bracket. They could end up paying thousands more.

There are other ways to generate a higher tax bill: You may have up to $200,000 in income before the Medicare surtax of 0.9 percent kicks in, but if you're married, that ceiling is $250,000. Also, the new limit on state and local tax deductions is not doubled for married couples: The $10,000 cap applies to single and married filers. Married couples filing separately get $5,000 for each deduction.

On the other end of the earnings spectrum, a marriage penalty can come from the earned income tax credit. Typically, the credit is available to working taxpayers with children if they meet income limits and other requirements. However, the income limits associated with the tax break aren't doubled for married couples. So, two people with incomes of $25,000 each and one child would pay $3,117 less in taxes if they remained unmarried.

Married retirees on Social Security also face tax implications. For single filers, if the total of your adjusted gross income, nontaxable interest and half your Social Security benefits is under $25,000, you don't owe taxes on these benefits. But, for married couples filing a joint return, the threshold is $32,000 instead of double the amount for individuals.

And at the state level, the marriage penalty can be more pronounced: A top rate of 5.75 percent in Maryland applies to income above $250,000 for single filers, but $300,000 for married couples.

This is just a general introduction to a complicated issue, and single or married, there are a lot of factors that can affect your tax liabilities. Be sure to get professional advice tailored to your circumstances.


Share Save

Your Comments

Katz Nannis + Solomon PC
Katz Nannis + Solomon PC
800 South Street Suite 250
Waltham, MA 02453
Connect with me on LinkedIn
Saved Articles
Comments and Feedback
Refer A Friend
Your Privacy
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Powered by
Copyright © IndustryNewsletters All rights reserved.

This email was sent to: lsierra@knscpa.com

Mailing address: 800 South Street, Suite 250, Waltham, MA 02453