Is there still a marriage penalty?

**Seeker** · 09-06-2009, 08:32 PM

I'm not sure I understand your question.

The "marriage penalty" only comes into play if both the spouses are working and together their combined income is over 120k (old amount, the income amount is probably different now)

Marriage penalty for couple with disparate incomes

Article is from 2006 however ???

**KTP** · 09-07-2009, 06:35 AM

Ok, So using that table and for ease assume spouse 1 makes $188,450 and spouse 2 makes 0.

Married, they pay $42,170

Single, spouse 1 pays $48780

So a difference of $6610

That is quite a bit to make up if you were to propose that living together is cheaper than marriage tax wise.

**MonkeyMama** · 09-07-2009, 07:51 AM

The marriage penalty was largely removed from the tax code, around 2000.

Not that there isn't some "penalties" still there.

We pay far less taxes being married on one income than single on one income. Approximately 50% less.

**KTP** · 09-07-2009, 08:11 AM

Hmmm, well maybe it actually does exist once a certain income level is gained.

In my example, the $6610 difference seems to point strongly to marriage being cheaper for the 1 earner family.

But, look at what the other person in that scenario is giving up:

Tuition tax credit: $2000
Stimulous payment: $600
Roth IRA contribution: unmeasurable, but could be significant in the long run
Earned income tax credit: no idea here

The situation becomes much much worse if the 2nd person takes a small part time job making a little money (say 10,000/year). This money would be taxed at 33% in the married scenario, and yet if they were just living together there would be zero tax on a 10,000/year income.

This is a very real situation with me. My wife earns enough to put us above the limits on all the goodies, but not really enough in our high cost of living area to consider us rich. Any extra income I would make would be taxed at the highest levels, which when combined with the cost of another car, clothes, etc. makes working at a significantly lower income job not worthwhile.

**wnlbutterfly** · 09-07-2009, 08:56 AM

I pondered that also, but I am old school. I would not change our marital status just for a little more $$ at tax time. Just like I don't think people should adopt a child for a tax credit at tax time (adoption credit). I think it falls into the same category.

I have know several couples that don't legally get married for this very reason.

But do you not bother to earn extra income just because you would be paying taxes? Of course if you are working ONLY to end up paying it all in taxes, would be different. Guess you could plot out how much she can work and still get the benefits and stop working when that limit is reached.

I happen to know a lot of people that do this for EIC, they know exactly how much they can earn during the year to hit the peak of EIC at tax time and then quit.

**ktmarvels** · 09-07-2009, 10:19 AM

Non working spouses can contribute to IRAs. We max out my IRA each year even though I don't usually make that much working...it's called a 'spousal IRA', but honestly I don't think we've had to fill out any different paperwork or do anything differently than if it were me making the money.

**disneysteve** · 09-07-2009, 12:15 PM

Originally posted by ktmarvels View Post

Non working spouses can contribute to IRAs. We max out my IRA each year even though I don't usually make that much working...it's called a 'spousal IRA', but honestly I don't think we've had to fill out any different paperwork or do anything differently than if it were me making the money.

I think what KTP was getting at was the fact that there is an income limit for contributing to a Roth. If one spouse earns more than the limit but the other spouse doesn't, he/she still can't contribute because the married income is too high. If the lower earning spouse was single, he/she could still do the Roth based on their own income being under the limit.

**Professorshak** · 09-07-2009, 01:21 PM

My sister and her husband were married accoriding to religious law but never did a civil marriage because she would be denied several benefits which have allowed her to have govn't medical coverage, food, child care, etc.

Her husband only makes 2k a month and they're very religous (kosher is expensive) If not for government aid, they would be in trouble and she just had her second child.

**irmanator** · 09-07-2009, 02:30 PM

Originally posted by Professorshak View Post

My sister and her husband were married accoriding to religious law but never did a civil marriage because she would be denied several benefits which have allowed her to have govn't medical coverage, food, child care, etc.

Her husband only makes 2k a month and they're very religous (kosher is expensive) If not for government aid, they would be in trouble and she just had her second child.

Isn't that a touch fraudulent?

**Professorshak** · 09-07-2009, 02:59 PM

Originally posted by irmanator View Post

Isn't that a touch fraudulent?

It's a little more complicated than that, and she can't work because she didn't finish high school.

I ask her this all the time, and she replies "No one would take care of us otherwise"

My wife and I are legally married and do EVERYTHING jointly and we're being rejected for any type of aid simply because I make twice the poverty line.

Now I'm not blaming anyone except society which makes things like affordable insurance and housing difficult for those who work but don't make enough to comfortably get by.

**irmanator** · 09-07-2009, 05:04 PM

a lot of ppl that didn't finish hs work.... still makes it fraudulent

**Professorshak** · 09-07-2009, 07:41 PM

Originally posted by irmanator View Post

a lot of ppl that didn't finish hs work.... still makes it fraudulent

While it's not something I would do, I wouldn't call it fraudulent either. As I mentioned earlier, it's a bit complicated.

As for the post heading, while there are many benefits to civil marriage, there are times when I feel like we're being penalized for doing things the right way and it does cost us.

**LivingAlmostLarge** · 09-08-2009, 05:18 AM

Since when is a religious marriage not considered civil? And how do you get away with being religiously married yet not filing?

There is a marriage penalty.

Roth IRA income limits is $90k for single and $165k married. So around $80k for each married person. How is that fair?

**disneysteve** · 09-08-2009, 05:52 AM

Originally posted by LivingAlmostLarge View Post

Since when is a religious marriage not considered civil? And how do you get away with being religiously married yet not filing?

I was wondering about that, too. We got married once in a religious ceremony. We had to get a marriage license in order to do so. The wedding made us legally married in the eyes of the religion and in the eyes of the state. Perhaps it is possible to have a religious ceremony without getting a marriage license or recording the ceremony with the state.

Is there still a marriage penalty?