Most of us know that marriage is an institution. Many new brides may say an institution of everlasting commitment and true love, men who have said their vows seemingly a lifetime ago may see it as more of a mental institution, proof that opinions are like—well, um—bellybuttons, everyone has one, to coin an old phrase.
That being said, everyone’s favorite uncle, that is—Good ole’ Uncle Sam, has his opinion too, he views marriage as a financial institution.
What, you thought marriage was a beautiful act and celebration of love and the joining of two souls till death do they part? Well, it may be, and marriage certainly has a few monetary gains, such as the ability to jointly afford a down payment for a home—after all 77 of homeowners are married couples, but also there can be no institution or custom that the government doesn’t get a cut of, and in this case I speak of Marriage tax.
Marriage tax! What is that? You mean they are taxing us on our undying love and affection?
No, not exactly, but yes, kind of. Yes, I see what I wrote, and I acknowledge its vagueness. (Admitting you have a problem IS the first step to correcting the problem). You see there is no “Marriage tax” per se, but there is a noticeable difference between taxes paid between single and married people making the same income. This difference is referred to fondly, as the marriage tax or the marriage penalty, sounds quite ominous, doesn’t it?
What this means simply is, if you and your spouse fall into the correct tax bracket, you are eligible to be taxed up to 25 jointly. In 2003, the Jobs and Growth Tax Relief Reconciliation Act of 2003, decided that the standard deduction was to be equalized, increasing the end point of the 15 percent tax bracket, but only for married coupled that filed jointly. So, while this helped a bit, the marriage tax still exists just not as harshly as it has in the past. But in other, but related news, depending on how Congress handles tax relief, the full penalty is likely to be reinstated in 2010.
Now having said that, not all news is not bad news for marriage and taxes, the U.S. government allows homeowners to keep up to $250,000 tax free when they sell their house, this number increases to $500,000 tax free profit when the home is sold by a married couple who is filing jointly, thus showing who really is the top contender in the battle of marriage vs. the single life.
So, there is some good news for those seeking a life of wedded bliss. After all, when the rings are exchanged, the cake eaten, the dances danced, all you will have is each other, a new life, a photo album that statistically you may look at once a year, and the comforting knowledge that it only costs 20 more for two people to retire than one if you share expenses and live together, and, oh yeah, that you will always have each other, for better or worse, till death do we tax.
Author Resource:
"Your Money Matters" Carl Hampton, authur of "From Credit Despair To Credit Millionaire" http://CarlHampton.com
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