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For many, filing as married jointly results in higher tax than if wife and husband had filed separately and as single. The reason is the income doubles but the tax brackets are not at double.
I.e. if each spouse earns 100k for a total of 200k, then married filing jointly taxes would be higher than two separate single filing with 100k. It's called the marriage penalty.
And IRS does not let us file separately and as single if we are married right?
Broadly speaking, married couples with a single earner generally receive a marriage bonus, while married couples with two earners generally receive a marriage penalty. Not always the case, but that's the norm.
For many, filing as married jointly results in higher tax than if wife and husband had filed separately and as single. The reason is the income doubles but the tax brackets are not at double.
I.e. if each spouse earns 100k for a total of 200k, then married filing jointly taxes would be higher than two separate single filing with 100k. It's called the marriage penalty.
And IRS does not let us file separately and as single if we are married right?
The tax brackets are (in your example, respectively) $20,981.75 and $42,884.50 ($21,442.25 each). Pretty simple to see that married people are being...
Wait. Your spouse counts as a dependent. That's $6,300 in a credit right there, which means your taxable earnings are actually for the $193,700, which results in the married tax rate as $41,120.50 ($20,560.25 each).
The calculator has my wife and I just about breaking even (based on approximate numbers). A few hundred either way depending on slight changes in expected income.
Most high-income married couples will get a tax cut, unless they pay extremely high property taxes relative to income (ie like 50k on 400k of income).
With the AMT, I dont get to deduct my property taxes as it is. My state income tax either. My mortgage interest is grandfathered in at $1M. So all I am getting is cuts from the bracket adjustments, no increases.
The way I look at it, taxes always change. The Bush tax cuts had an expiration date too. Obama decided to keep most of them. 8 years from now is a long time away. They could change before that, or they could be extended at that time.
ha...the debt calculator? Yes, I believe 8 years from now, after these tax cuts have caused an enormous loss of revenue, which just means that the pendulum will swing and another democrat will inherit a ridiculous debt and will have the job of turning around the economy with stimulus packages again. In the meantime, the average american gets to trade their retirement age in SS payments and medicare (that's the cutbacks the repubs will do in 2 years--they will roll back the retirement age to pay for these tax cuts) for an average 1-3k tax cut right now. It's looking a lot like 2008 right now.
If only the average American were known for financially sound choices and were likely to invest the 2k from their tax cut into their own private retirement. Alas, we know that statistically the average american has no more than $300 in a savings account and the american people have basically just sold out their own future for a quick 2k now.
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