Question

In 2018, Jasmine and Thomas, a married couple, had taxable income of $105,500. If they were to file separate tax returns, Jasmine would have reported taxable income of $95,500 and Thomas would have reported taxable income of $10,000. Use Tax Rate Schedule for reference. What is the couple’s marriage penalty or benefit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Tax rates for married individuals filling individually.

Up to $9525 = 10%

$9525 to 38700 = 12%

$38700 to $ 82500= 22%

$82500 to $ 157500= 24%

Using these tax rates calculation for tax is as follows.

Thomas's income for the year = $10000

Tax rate for first $ 9525 @10%

Tax rate for ($10000-$9525) is 12%

9525*10%=952.5

475*12% = 57

Total tax on thomas's income=952.5+57=1009.5

Tax calculation for jasmine's income

Taxable income= 95500

First 9525@10% =952.5

Next( 38700-9525)i.e. 29175@12% =3501

Next (82500-38700) i.e. 43800@22%=9636

Remaining (95500-82500) i.e.13000@24%=3120

Total tax on jasmine income= 952.5+3501+9636+3120=17209.5

*note- if there is an amendment in tax rate than amended rates can be applied the pattern for the answer will be same just the rates needs to be updated.