Long term lurker on hacker news. My wife and I got married last year and this will be our first time filing our taxes jointly. At the beginning of the year, we naively changed our W-2 withholdings to married and ended up with a massive tax bill at the end of the year. Little did we know, choosing married on your W-2 results in less taxes being withheld because it assumes that you're a single income family, whereas in reality our taxes actually went up. Seeing this number triggered me to dig a little deeper into the tax code and saw how unfair this was. How many of you guys are dual-career couples who were impacted by this quirk as well?
You can still file separately, but the brackets for singles and married filing separately are different. The brackets for married filing separate is effectively the brackets for married filing jointly except split in half. At lower levels it's the same, but once you get to the higher ends of the 25% and beyond they start to diverge: http://www.bankrate.com/finance/taxes/tax-brackets.aspx
The marriage penalty is simply absurd. My wife and I have talked about getting divorced to save money, but staying together, and then getting married again later in life when the healthcare-related benefits might start to make it worth it.
Getting rid of the marriage penalty seems like something that could get support from both sides of the political spectrum. It would mean lowering taxes, and it also would mean helping to encourage two-earner families and - practically speaking - help women have more powerful and high-earning careers. That said, I think the penalty only kicks in above a certain combined income, so maybe there aren't actually enough voters personally affected by it.
Haha, my wife and I are having the same conversation right now. It's insane that this kind of conversation even exists in the first place! Looking at a visual that I found on NYTimes (http://www.nytimes.com/interactive/2015/04/16/upshot/marriag...), it seems like at the high end it kicks in at ~180k, but it seems to also exists at the very low end as well ~35k.
Maybe after the divorce, marry each other's unemployed parents, and get a marriage tax bonus instead of the penalty. (Don't know if this is legal, Not legal advice).
Bah. The tax code is insane, but isn't easily changed. Somehow I doubt that this petition can make a difference.
Here are two current personal examples of how crazy it is:
1) My daughter is a HS senior, who will be going to college in the fall. Together, my wife and I own a house and sufficient assets that my daughter won't get much financial aid (at least at a state college). However if we divorced and my wife kept the house and I kept the money, then my daughter would qualify for a lot of aid. This is because the equity in a house doesn't count, and other financial assets only count for 1 parent (which would be the ex-wife without income or assets, not the divorced dad with income and assets). So, being married means a big financial cost compared to the "free" money of financial aid. Not that we would get divorced for this reason, but it means we won't qualify for $100,000 (or more) in aid over 4 years. And we'll miss out on another $100,000 for our younger child.
That's the downside of "needs" based aid. It's easy to game the system.
2) Much more serious, and sad. My daughter's friend is also an HS senior who wants to go to college. Her father died, her mother remarried. But her stepdad has enough income/assets that there is no financial aid available for her. Her stepdad didn't sign up for spending $30,000 or more a year for college for an 18 y/o stepdaughter, he's got his own children to think about. Why should he deplete his assets for a kid who recently entered his life? That's not how a 2nd marriage works in the real world!
So my daughter's friend has no assets, her mom has no assets, but there is no financial aid available for her!
The real world is full of crazy situations like this.
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[ 4.3 ms ] story [ 22.0 ms ] threadGetting rid of the marriage penalty seems like something that could get support from both sides of the political spectrum. It would mean lowering taxes, and it also would mean helping to encourage two-earner families and - practically speaking - help women have more powerful and high-earning careers. That said, I think the penalty only kicks in above a certain combined income, so maybe there aren't actually enough voters personally affected by it.
Here are two current personal examples of how crazy it is:
1) My daughter is a HS senior, who will be going to college in the fall. Together, my wife and I own a house and sufficient assets that my daughter won't get much financial aid (at least at a state college). However if we divorced and my wife kept the house and I kept the money, then my daughter would qualify for a lot of aid. This is because the equity in a house doesn't count, and other financial assets only count for 1 parent (which would be the ex-wife without income or assets, not the divorced dad with income and assets). So, being married means a big financial cost compared to the "free" money of financial aid. Not that we would get divorced for this reason, but it means we won't qualify for $100,000 (or more) in aid over 4 years. And we'll miss out on another $100,000 for our younger child.
That's the downside of "needs" based aid. It's easy to game the system.
2) Much more serious, and sad. My daughter's friend is also an HS senior who wants to go to college. Her father died, her mother remarried. But her stepdad has enough income/assets that there is no financial aid available for her. Her stepdad didn't sign up for spending $30,000 or more a year for college for an 18 y/o stepdaughter, he's got his own children to think about. Why should he deplete his assets for a kid who recently entered his life? That's not how a 2nd marriage works in the real world!
So my daughter's friend has no assets, her mom has no assets, but there is no financial aid available for her!
The real world is full of crazy situations like this.
As for whether or not this petition will make a different, it likely won't, but regardless it'll still have a larger impact than simply ignoring it.