MARRIAGE PENALTY FOR SOME
May 17, 2021 - Douglas Myser
Marriage penalty for some. President Joe Biden is proposing higher taxes on the top 1% to help pay for the $1.8 trillion American Families Plan. But the "marriage penalty" may hit couples earning more than $500,000. Financial experts say tax planning strategies may lessen the sting. The wealthiest Americans may soon face a slew of tax hikes. President Joe Biden wants to raise taxes on single filers likely with income over $452,700 and couples earning more than $509,300. But the plan may wind up penalizing some higher earning married couples. It's not the first time we've seen a marriage penalty," said Sabina Smailhodzic Lewis, certified financial planner. The "marriage penalty" happens when couples pay more in income tax filing jointly, than when they file a tax returns separately. "There's a certain level that our government officials think is enough income per person or household. Marriage penalty for some.
How BIden's capital gains proposal may hit middle class home seller. Biden's inherited real estate tax may impact more people than just the wealthy, How Biden's real estate tax plan may hit smaller property owners and investors. Currently, the tax code separates single and married filers, with a top rate of 37% for individuals earning over $523,6000 and couples making more than $628,300. Biden wants to increase the highest tax rate to 39.6%, impacting the top 1% according to the White House plan outlined. The proposal may still affect individuals making less than $400,000 however. For example, let's say each person makes $260,000. Under Biden's plan, those couples may pay higher taxes filing together than on their own. The measure would apply to fewer than 1% of families, the latest filing data from the IRS shows. But impacted couples may get a surprise at tax time, financial experts say. Luckily, financial experts say enough time exists to prepare for this, so you don't end up with a large tax bill and the need for Tax Resolution. Otherwise, be prepared for a big tax big.