How Much the Marriage Tax Penalty Will Cost You
Your spouse's high income might be nice – until it bumps you into a higher tax bracket.
Marriage is a wonderful thing, right?
It is … unless you’re talking taxes.
When talking about marriage and money, most experts talk about the tax advantages of getting married. However, these tax advantages are often only available to married partners with large disparities in income.
Sadly, spouses who earn similar amounts of money – especially those who are considered high earners – are often subject to a marriage tax penalty.
What is the marriage tax penalty?
When you marry, you have the option of filing your tax return jointly, or filing separate tax returns. The marriage penalty takes effect when the taxes you pay jointly exceed what you
would have paid if each of you had remained single and filed as single filers.
The marriage penalty is the opposite of what many call the marriage bonus. In a marriage bonus situation, you pay less in taxes as a result of your married status. The marriage bonus is most likely seen in partnerships where one spouse earns significantly less than the other. Situations in which one spouse stays at home or has a part-time job rather than a full-time job are most likely to result in a marriage bonus.
If you take a look at the Internal Revenue Service tax brackets, you’ll notice that the brackets for married filing jointly is not double that of single filers for every income range.
2014 Income Tax Brackets and RatesSource: money.usnews.com