NEW YORK (CNNMoney) — The return of the so-called marriage penalty
could cost many couples more than $2,000 in higher 2013 taxes if
Congress doesn’t get its act together and fix the fiscal cliff.
As a result of the Bush tax cuts, married couples get a standard
deduction that’s exactly twice that of individuals. And the income
ranges for the 10% and 15% tax brackets are also doubled. Prior to 2001,
many married couples had paid a “penalty” because their standard
deduction and income tax brackets were less than twice those of singles.
Next year the imbalance could return. While the standard deduction
for single filers should rise to $6,100, married couples would receive a
deduction of only $10,150 if lawmakers don’t extend the provision,
according to estimates by the Tax Foundation. To erase the marriage
penalty, it would have to be $12,200.
Married couples would also be moved into higher tax brackets more
quickly. Individual taxpayers would be in the 15% tax bracket until they
hit $36,250 in taxable income, but married filers could be pushed above
it after only $60,550 in income, as opposed to $72,500.
The marriage penalty never went away for higher tax brackets above
15% — and that would continue to be the case. Even if the Bush tax cuts
are extended, the 25% bracket would end at $87,850 for singles, but only
at $146,400 for joint filers. And the highest bracket starts at the
same income level regardless of whether the filer is a married couple or
a single person.
Married couples benefiting from the Earned Income Tax Cut would also
get hit if the fiscal cliff isn’t addressed. The last two
administrations raised the income threshold at which the credit begins
to phase out for married couples to $5,000 above the amount for
individuals.
Of course, the marriage penalty is only one of a bevy of provisions
that are set to expire after 2012 so exactly what both married couples
and single filers will pay next year remains up in the air.
Source : http://jacksoncounty.fox4kc.com/news/news/112288-marriage-penalty-could-make-costly-return
