Uh-oh. This time it could be for real. That oft-quoted, hardly found marriage penalty? I guess it finally had to come about, since Peter has been calling Wolf so long.
Because this year, a couple where both earn money will find the new taxes are going to take a bite out of their income. (Single earner couples will generally find they have a reduction in taxes.)
At the low end of the income spectrum, the tax brackets won’t affect two earner couples. But, those whose income exceeds $398,350 will find themselves in the 35% tax bracket. And, that makes no difference if one is single or married filing jointly. But, single folks will hit the top bracket (39.6% for income and 20% for capital gains) for every dollar over $ 400K- while married folks don’t hit that top bracket until they earn $ 50K more ($450K).
Married couples earning below $200K are not subject to the new tax rates and phase-outs of deductions, but there will be higher taxes than for singles earning that same amount of money.
The key consideration is to plan what you can and cannot due NOW- when you have time left in the year. Too many taxpayers think they can do their tax planning on the day they file taxes. And, are left holding the bag because they waited too long. (Actually, bags of money have been taken from them…)
It’s time to call us…
Glad there are people like you who can help people like me. Really who can keep up with all the laws and changes with out help with their taxes.
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Shawn:
Even if the brackets are not the ones that will affect you- or me- planning is always crucial. We need to pay our required share of taxes- but not one penny more.
Hi Roy,
I think here in the UK we are to (re)introduce tax breaks for married couples – presumably marriages made up of either sex…
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One would hope that this aversion and detestation of marriage- in any form- is not a universal concept, Gordon!
very interesting, it seems the time has come to get a divorce. I think we receive more when we reach social security if we’re not married, but I’m not sure about that. I am not in fear of reaching the $400K this year, but who knows. I do have a good tax man so I’m lucky he can help.
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Chef William:
Your second statement sets the issues. It depends upon how you both make- and you each make. Then, one can determine if one is affected- and how to deal with the issue.
Thanks for the visit- and for choosing a good tax man. (We only provide “great” 🙂 tax services)