Is the Marriage Penalty Tax Coming Back?


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marriage-penalty-taxIt’s strange, but true. There is a good chance that you’ll have to pay more in taxes if you’re married, then if you’re single next year.

The assumption in the marriage penalty tax is that you are married to someone who makes about the same amount of money that you do. Under current law, you’ll pay less tax being married, or at least the same amount of tax as opposed to being single and filing two separate returns. In almost every case I can think of, it will be more tax if you are married and choose to file separately. There is a reduction in the amount of deductions you can take as a married filing separately and the tax rates are higher than if you’re single.

But starting this next year (2013), we’re going to roll back to some old tax rate tables. There is a new 3.8% surtax coming into play and we’re going to lose some of our deductions.

The current tax rate tables are set up so that you do not pay more in tax if you are married, then if you and your spouse were single. The problem is that the old tax rate tables, the ones we’re about to revert back to, are set up so that married people will pay more. If one spouse makes a lot more then the other, the marriage penalty is not as impactful or might not even exist.

The new 3.8% surtax is effective for every single person who makes over $200,000 and every married filing joint couple who makes over $250,000. So, if you both make $150,000, there is no surtax if you’re single. But combined, you’re at $300,000 and so if you’re married, you will pay the tax.

It’s not only the high income tax earners that are getting hit by this marriage penalty tax. Look for a lot of people suddenly discovering that 2013 is their toughest tax year in a long time.

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