Marriage Penalty Return Part Of ‘Fiscal Cliff’ Impact

Could the “marriage penalty” return? The latest chatter about the so-called “fiscal cliff” involves a tax break available to married people who file jointly, and experts caution that spouses filing jointly in 2013 may pay more due to a continued failure in Washington to address the issue.

The marriage penalty return with which many are now concerned is only one aspect of “fiscal cliff” related woes, but as with many of the effects of looming changes in taxation and spending set to hit in 2013, Americans won’t “feel” the changes coming for a long while as they take effect.

The marriage penalty return aspect relates to the expiring Bush tax cuts, and a provision of those cuts that gave people filing jointly a standard deduction that is double that of an individual. In the past, the deduction was not as large and thus, people were “penalized” for filing as a married couple.

CNNMoney explains that while the marriage penalty return could be an issue for some American taxpayers, only a small number of people will be included in the group statistically, as the income levels affected are specific:

“Married couples would also be moved into higher tax brackets more quickly. Individual taxpayers would be in the 15% tax bracket until they hit $36,250 in taxable income, but married filers could be pushed above it after only $60,550 in income, as opposed to $72,500 … The marriage penalty never went away for higher tax brackets above 15% — and that would continue to be the case. Even if the Bush tax cuts are extended, the 25% bracket would end at $87,850 for singles, but only at $146,400 for joint filers. And the highest bracket starts at the same income level regardless of whether the filer is a married couple or a single person.”

A recent advice column on Cincinnati.com addresses the issue of the marriage penalty return as a consideration when marrying and filing taxes:

” … the standard deduction for a married couple filing jointly is 200 percent of the standard deduction available to a single taxpayer in 2012. Beginning next year, this amount is scheduled to drop back to only 167 percent of the single amount. On the other hand, couples where one spouse makes significantly more than the other may enjoy a tax benefit by filing jointly.”

As the former points out, however, the marriage penalty return is just one of a few ways tax filings are set to be slightly different in 2013, which could affect your tax rate.