# Marriage penalty workaround **URL:** \ **Category:** Factual Questions\ **Created:** [May 17, 2006, 9:27pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169 "2006-05-17T21:27:27Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [May 17, 2006, 9:27pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169/1 "2006-05-17T21:27:27Z")
Is it possible to create the Mr&MrsX Corporation, and have both Mr and Mrs X have their respective employers make out their paychecks to the corporation instead of the individual. Obviously Mr&MrsX Corporation has to serve some legitimate function as a business of some sort; I’ll leave that detail out. As a result MrX and MrsX have zero personal income; the corporation has their “salaries” as cash-in. Subtract corporate expenses, and get taxed as a corporation on that amount. Would this be legal? ---
**Author:** ![Random](https://avatars.discourse-cdn.com/v4/letter/r/57b2e6/32.png) [@Random](https://boards.straightdope.com/u/Random)\ **Post date:** [May 17, 2006, 10:16pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169/2 "2006-05-17T22:16:52Z")
[QUOTE=BwanaBob] Would this be legal? [/QUOTE] That’s a hard question. I don’t have the time to answer any hard questions today. But I do have time to answer an easy question. So if someone copied your entire post, except what I’ve quoted above, and replaced it with: [quote = hypothetical someone] Would this be stupid? [/quote] I would respond: > [@me](#): > > Yes! Because it would be pointless. Either the corporation accumulates money, doing Mr. and Mrs. X no good at all, or it distributes that money in some fashion to Mr. and Mrs. X. If the latter, it’s income, and Mr. and Mrs. X pay taxes on what’s distributed. Double taxation! Ooops. (For those playing at home: Of course, an S election would avoid the double tax. I trust that anyone who knows what an S election is doesn’t need an explanation of the other reasons that this wouldn’t work.) ---
**Author:** ![19ForMe](https://avatars.discourse-cdn.com/v4/letter/1/439d5e/32.png) [@19ForMe](https://boards.straightdope.com/u/19ForMe)\ **Post date:** [May 17, 2006, 10:25pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169/3 "2006-05-17T22:25:33Z")
There was a time where this could be done. At this point it just serves to raise your taxes. It would be a Personal Service Corporation (See Section 269A of the Internal Revenue Code). ---
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [May 18, 2006, 1:37pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169/4 "2006-05-18T13:37:08Z")
[QUOTE=19ForMe] There was a time where this could be done. At this point it just serves to raise your taxes. It would be a Personal Service Corporation (See Section 269A of the Internal Revenue Code). [/QUOTE] Thank you for a civil reply. ---
**Author:** ![19ForMe](https://avatars.discourse-cdn.com/v4/letter/1/439d5e/32.png) [@19ForMe](https://boards.straightdope.com/u/19ForMe)\ **Post date:** [May 18, 2006, 1:57pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169/5 "2006-05-18T13:57:52Z")
[QUOTE=BwanaBob] Thank you for a civil reply. [/QUOTE] No problem. The idea was cutting edge a few decades ago. The Congressional “fix” is pretty harsh so it almost never comes up anymore. The S-Corp comment above is real. Using one in some circumstances can reduce payroll taxes (FICA etc.). In the last election, I believe it was a minor point of attack against John Edwards. He used it to reduce is medicare tax. Its a legal move but only useful in a handful of circumstances. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [May 18, 2006, 2:21pm UTC](https://boards.straightdope.com/t/marriage-penalty-workaround/357169/6 "2006-05-18T14:21:34Z")
This could work if you were both Self-employed consultants, however. But you’d have to get a Tax pro to help you with it. Of course, everyone here has to understand there really isn’t a “marriage penalty” at all. In fact, there’s a HUGE “marriage bonus”, for those “traditional” families with a Working husband, a wife with little or no income (and maybe a couple of kids.). The Tax Code was designed to benefit just that sort of family. Byt doing so, it can be disadvantageous to have two working spouses each with a nice income.