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The marriage penalty on itemized deductions



February 05, 2010 – Comments (3)

Good lord, Uncle Sam sure loves married people's money!  I was talking to my brother who realized that this year he has to send in over $1,000 to the IRS, even though he claims a 0 withholding while his wife only used a 2. 

We've all heard about the marriage penalty... you know, same woman for the rest of your life (ha ha just kidding).  It's something that happens due to the progressive structure of taxes that makes some married couples get taxed even more than if they were both just single.  There used to be another factor, which was that the standard deduction of married couples was less than 2x a single person's standard deduction, but that's been done away with.

But what about the "poor" souls who own homes and itemize?  Not only do they get hit with the progressive structure burden, but they also get whacked because they basically lose a whole standard deduction!  For example, if my brother owned a house and paid his mortgage, taxes, etc, and he deducted all those yearly, and meets a non-homeowner woman who uses the standard deduction... when they marry, all they get are the same itemized deductions that my brother would've had while he's single, plus her state taxes (about $2,000).  Sure that helps some, but they would've been much better off being single and getting to claim his itemized plus her standard (about $6,000). 

Guess that's another reason to stay away from the ball and chain!

3 Comments – Post Your Own

#1) On February 05, 2010 at 8:44 PM, outoffocus (24.12) wrote:

Regardless of whether you are married or single, if the IRS considers you middle class you are going to get screwed.  Most deductions phase out for you after a certain income level regardless of whether you are married or single. If you are married under a certain income level, there practically is no marriage penalty.  But the higher the income the more you are penalized. The AMT affects both married and single people. Student loan deduction phases out for both married and single people. 

Middle class single people are screwed because most single people rent.  Therefore most do not have access to schedule A deductions and do not have many adjustments.  Claiming just a standard deduction on a $60000+ AGI means you essentially you pay more in taxes than the poorer people because they are in a lower tax bracket and you pay more than married people because you cannot itemize.  So you're screwed for being mildy successful. Whoopteedoo. 

The moral of the story is, if you truly want to avoid taxes, start a business. 

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#2) On February 05, 2010 at 10:26 PM, starbucks4ever (87.04) wrote:

I don't understand why they can't be "married filing separately". 

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#3) On February 06, 2010 at 6:42 AM, outoffocus (24.12) wrote:

Married filed separately has the highest of all tax rates and penalties.

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