Marriage And Taxes
Marriage and Taxes
Getting married is the greatest day for 50 percent of couples .
The other 50 percent get divorced .
Perhaps the marriage tax penalty has something to do with it .
Family Values – Hardly
For all the chatter from politicians about family values, it is ironic that the tax code actually penalizes people for getting married .
At its heart, the tax code is designed to modify behavior .
Deductions and credits are given in areas the politicians wish to promote and taken away in areas considered less positive .
Home ownership is viewed as a good thing, so mortgage interest is deductible .
Cigarettes are bad, so they are taxed like no tomorrow .
If you buy this argument, one must wonder why married couples suffer under the tax code .
A recent study found that by getting married, couples are forced to pay roughly $1,500 in additional taxes .
Known as the marriage penalty, one must wonder what the government is up to .
is it trying to promote family values or not? the numbers would seem to indicate not .
The marriage penalty is a nasty little development for newlyweds .
The penalty occurs because married couples must pool their earnings when they report taxes .
Typically, this means their pooled earnings move them into a higher tax bracket and they pay more taxes .
For instance, assume husband makes $45,000 a year as does wife .
As a married couple, their pooled income is $90,000 with the accompanying tax consequences .
For really doomed couples, the combined income will actually kick in the alternative minimum tax .
The AMT more or less voids many major deductions .
In the tax industry, there is a nickname for this situation – the divorce tax .
The marriage penalty has existed for years, yet the politicians have failed to find a fix .
They pay lip service to the idea, but no major changes have been made to fix the problem .
The best they have come up with is doubling the standard deduction for married couples, but this has had little impact since most couples itemize their deductions .
It appears the marriage tax penalty is here to stay for the foreseeable future .
One has to wonder why our family values President didn’t include a fix in his tax cuts.
No comments: