Marriage penalty

[gcgang]

2013 single 15% bracket caps @$36,250, joint at twice that amount, $72,500.
Single 33% bracket caps @$398,350, joint also at $398,350.
Moral of the story: if you make a lot of money, don't get married!

 

[heeyy_joe]

Uh, sorry...I don't understand your moral (or the logic). How does making a lot of money and staying single help you pay less taxes?

 

[HFWR]

2013 single 15% bracket caps @$36,250, joint at twice that amount, $72,500.
Single 33% bracket caps @$398,350, joint also at $398,350.
Moral of the story: if you make a lot of money, don't get married!

In my experience, doing the second will remedy the first...

 

[bondi688]

For some, marriage itself is penalty enough.

 

[Original Wally]

There has been an inherent "marriage penalty" in the tax code for years. For a while there was a modest attempt to minimize it with a Schedule W deduction of 10% of the lesser spouse's income. The structure became a "penalty" as more women entered the work force. "Back in the day" it was actually a tax relief for married guys with one income - because they had the "burden" of a family that a single guy didn't.

When I was doing my Masters, I recall looking at one case... Hubby and Wife were both highly compensated... MD and Atty, out of NYC, IIRC. For years they would fly to the Bahamas over Christmas, and get divorced. Then re-marry January 2nd or 3rd before returning home. So they were legally divorced on 12/31 each year, and filed as "Single" - the diff in taxes was more then the cost of the vacation. Somehow IRS got wind of it, and took it to court. Couple lost. The argument was that they were getting a "sham divorce" - that there was on intent to divorce and should be considered married. Substance over form in that case.