Question

In 2020, Jasmine and Thomas, a married couple, had taxable income of $106,500. If they were to file separate tax returns, Jasmine would have reported taxable income of $96,500 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.)

Answer 1

Ans.US tax slabs for this couple,

For filing joint returns, the tax paid on $106500 = 10% (from 0 to $19750) + 12%(from $19751 to $80250) + 22%(from $80251 to $106500) = 1975 + 7259.88 + 5774.78 = $15009.66

For filing individual returns,

For filing individual returns, the tax paid by huaband on $10000 = 10% (from 0 to $10000) = $1000

For filing individual returns, the tax paid by wife on $96500 = 10% (from 0 to $19750) + 12%(from $19751 to $80250) + 22%(from $80251 to $96500) = 1975 + 7259.88 + 3574.78 = $12806.66

Thus, marriage couple's penalty = 15009.66 - 1000 -12806.66 = $1200
Thus, marriage couple pays $1200 more tax.