If you are planning a wedding, you probably do not want to hear that there could be a penalty for being married. However, the amount of taxes that you pay after you marry are affected by the various provisions in the federal income tax code. This is called the “Marriage Penalty.”
In some cases of married couples, the individuals pay more taxes as a couple than as individuals. The starting dollar amount for each federal income tax bracket is the factor affecting this tax scenario or reality.
Because of the different percentage brackets of a single person and a married couple, there is an increase on the tax of the combined income. For example, a joint return for a married couple jumps to a rate of 28% at a combined income of $146,401 where as a single is taxed at 28% with a salary of $87,850. Phase-Outs of personal exemptions and itemized deductions are other provisions that can lead to a marriage penalty. When you’re married filing a joint return, reductions begin when your adjusted income is greater than $300,000. Reductions start at $250,000 when you’re single. Marriage bonuses, situations when tax liabilities can decrease after you marry, is also created by the tax code. Furthermore, the new healthcare laws created two new taxes that can create a penalty. The threshold for both taxes is $250,000 when you’re married filing jointly and $200,000 when you’re single.
The partnership between you and your spouse, whether newlywed or having married years ago, affects your exemptions, deductions, tax brackets, and credits. Contact us today at 706.353.1711 to discuss any questions you may have about your taxes.