I’m going to get married next year. The fiancee and I were talking about finances and such, and I mentioned something about us filing jointly. It has always been my understanding that two married people pay less taxes than two single people, all other things being equal. This is an argument I’ve often heard in favor of allowing same-sex civil unions, if not marriage – why should only het couples get a tax break?
However, she pointed out that the standard deduction for singles is about $4400, while for married couples it is only around $7300. Am I missing something, or does this mean married people actually pay higher taxes?
(I haven’t bothered to go find all the tables and do all the math by hand, as I was hoping that some of the wise married people here could enlighten me and save me the hassle. Yes, I know I’m a lazy bastard.)
You really need to run your numbers through the calculations to see how you will be effected.
In general, if both have income that is roughly equivalent, you will end up paying more when you are married. Doesn’t matter if you file joint or seperate returns.
If one spouse has a significantly higher income than the other, you will pay less as a married couple filing a joint return.
My husband asked our tax person this several years ago and because we are life long friends she actually calculated what ours were that year, both married and had we not been married but cohabitating with our children. That year we paid just over $1800. more because we are married.
Caution - I am not a CPA or Tax Attorney. Anyone who uses this as authoritative information deserves what they get. This analysis looks ONLY at basic tax rates, standard deductions, and exemptions for two people. The basic points remain the same, but dollar figures may change substantially if you itemize deductions, have or expect children over the coming year, etc.
barker is basically correct. The big difference between taxation for single people and married couples filing jointly is that the marginal taxation rates are different. A single person pays no tax if their total income is less than $7200 ($4400 standard deduction plus one exemption at $2800), married couples pay nothing on taxable income under about $13,000 ($7300 deduction plus two exemptions for $5600). Singles then pay 15% between 7200 and 33,450 - 28% up to about $70K, and so on. Marrieds pay 15% between 13,000 and $56,800 - 28% between $56,800 and about $120,000 and so on.
If all of these dollar figures were exactly doubled, then married couples would never be worse off (and would be better off whenever the income of one spouse fell in a different tax bracket than that of the other spouse). When they are not quite doubled, as is true here ($13,000 is less than two times $7200 - $56,800 is less than two times $33,450, etc.), the taxes for a married couple may be better or worse depending on your particular situation.
I believe that, to get a guess about how you will do, figure out which tax bracket you and your future spouse fall in. If you fall in the same bracket, you will pay more in taxes. If you fall in different brackets, and the lower-paid spouse falls substantially below the top end of the tax bracket he/she lies in, the odds are good that you will pay less in taxes.
Source for the above - IRS Instructions for filling out form 1040 - http://ftp.fedworld.gov/pub/irs-pdf/i1040.pdf (a table of tax brackets can be found on page 114 of this document)