It's tax time! Yeah! Well, I'm always happy because I always get a refund. Not a ridiculously huge one, but a decent one. Yes, I know, it is best to minimize the refund so you don't just give a free loan to the government. But as the refund gets smaller and smaller every year, I'd rather be used to my current flow of income and get smaller and smaller refunds than have to pay more. It just feels better to get money back.
I generally get my taxes done before the end of Januaray - in fact, I'll probably finalize them tonight. I use TurboTax - for both federal and state, and I file electronically. I've used it ever since I've been a working professional making real money, so that's like ten or so years now. I really like it.
What I don't like, though, is the utterly ridiculous marriage penalty. I think this year my wife and I are paying about $6000 to $8000 extra in taxes because we are married. If we were single, we'd have saved that much combined on our taxes. Which is another reason I'm glad my deductions from my paycheck are set the way they are, because otherwise, we'd owe quite a lot. What saves us are our deductions, mostly for the house taxes and mortgage interest. Otherwise we'd be paying thousands in taxes now rather than getting a nearly $1800 refund. But still, we'd get up to a $10,000 refund if we were single filers. So in essence, we are paying the government over $500 a month, or over $6000 a year, to be married. That's pretty damn steep. Talk about "family values" - yet they will never fix it because they'd lose far too much revenue. We can only cut revenue when it saves the rich a lot of money. But marriage - well, that doesn't matter. Or apparently only is a big deal if there are two penises or two vaginas in a marriage - then it is the end of the world and will result in the destruction of marriage as we know it, and the collapse of our society. But paying six grand per year for the "pleasure" of marriage, well, that doesn't hurt the institution at all.
It is almost worth it just to get a divorce - we'd save so much money - the divorce would pay for itself in the first year. That's just sad.
But I don't expect this will ever be fixed. What a load of bullshit.
Reminder
12 years ago
7 comments:
Why not just file as "married filingt separately"? You pay at the single rate, but your combined income won't push you into a higher tax bracket.
I don't think that matters - the rate is the same. The penalty is because for a married person, the brackets are increased by 2/3 (except for now maybe the lowest one) instead of doubled - which is great if you have one person who does not work. But when someone works, that 2/3 increase means that you pay more than the single rate. If you do married filing separately, you do not pay the single rate, you pay the married rate / 2, so mathematically it is the same. I don't think there would be any concern if one could avoid the marriage penalty simply by filing spearately.
In fact, we did file separately one year, simply because it was too complicated for me to handle, because there was overseas income and such and my wife's firm had a professional do it for us. We didn't save any tax money (and as it turned out the "professional" they had do it made a pretty dumb mistake that I caught and had to correct otherwise we'd have paid a lot more on the foriegn income than we should have).
All married filing separately does is double the work you have to do (though I suppose with tax software now being what it is, it is probably the same amount of work).
Or, to put (fake) numbers on it, my understanding is that, say the single rate says up to 10,000 is one rate. Married jointly, that is increased to 16,667. Married separately, then each person pays on that rate up to 8,333 (and thus you go to the higher bracket sooner than if you were single).
I'm not a tax accountant. My wife and I typically save about $1,500 filing separately, but most of that is in state taxes.
That is very interesting - now you got me wondering about California's income tax. I just looked it up and it looks like it is a graduated (progressive) income tax. And since you said you save money, I assume there is no marriage penalty in the gradations. I don't pretend to understand California taxes.
In Michigan, we all get taxed at the same flat rate (recently increased to 4.35% as part of budget games). So it doesn't matter if we file together or not for Michigan (or Federally, for that matter).
I'm not an accountant either. My wife technically is (though she doesn't actually do accounting - she hates accounting) - so I still end up doing our taxes. Well, Turbo tax does, in any case.
I just got married and have realized that my husband and I have just been bumped from the 28% federal tax bracket to the 33% bracket. I'm furious! How is this fair?! Based on our combined income we will be paying $11,500 more in taxes this year.
Sarah - yeah, doesn't that suck? Nice to see how much those politicians are so concerned about marriage. I have to wonder where all those politicians so concerned about marriage being "destroyed" by gay marriage they are out to amend the constitution - where are they when it comes to fixing the tax penalty on marriage?
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