> > Now, this confuses me. This year, Darien and I were eligible to file separately or jointly, since we got married during the year. I figured it out both ways, and we got much *more* money back by filing jointly.
> >
> > Also, the front of my 1040A instruction booklet says very specifically that in almost all cases, filing as "married filing jointly" will give you a bigger refund or make you owe less tax.
> >
> > Maybe they spring this penalty on you after a couple years. Or maybe we're just already so poor we didn't notice. :-}
>
> My dad is a CPA, and he does our taxes for us every year. The first year we were married, he told us that sometimes you get more by filing singly, and vice versa, so he did our taxes both ways to see which would get us more back. We ended up filing jointly.
>
> Gri"have a kid and that'll help too"shny

I checked with my tax consultant about this (koaladad, who used to do this for a living), and he said that the "marriage penalty" happens when a couple's combined income bumps them up into the next higher tax bracket. [Separately, they each would have stayed in the lower tax bracket]. The higher your income, the higher percentage of tax you pay...so even though you're not earning more money than you used to, a bigger chunk is taken out of your paycheck *only because you're married* and are filing jointly.

Real-life example: One of my co-workers got promoted from peon to lower-rung managment, and later figured out that his net income would actually be *lower* (despite the hefty raise) because it bumped him and his wife into the next tax bracket.

Now, they could use the "married, filing singly"
option, but the tax rate for that is *still* higher than "single, filing singly" rate. So you are still being penalized for being married.

In a way, it's a prosperity tax as well as a marriage penalty--people at the lower income ranges of each tax bracket wouldn't have enough combined income to make a difference (and would benefit from filing jointly); it's only those at the mid-to-higher ends of each range that are effected.

It is balanced a bit by some benefits, though. When "married-filing jointly", you can combine your itemized deductions (like medical expenses) which might allow you to meet the threshhold to take an extra deduction, that you couldn't do singly.

Any inaccuracies here are my own--feeling a bit muddleheaded from the flu, and even though I DID TAKE NOTES, I'm not sure I caught it all 100% :-)

koala"nice to have an accountant in the family"mom