Amy J.N. Yurko, J.D., Ph.D.; Christine Cheng, Ph.D.; and Cheryl T. Metrejean, Ph.D. have published their article, Amy J.N. Yurko et al., The Marriage Tax Penalty Post – TCJA in the AICPA Tax Advisor (June 1, 2019).
The Executive Summary of their article is as follows:
Long-standing features of the Code provide a lower combined income tax liability for an unmarried couple than the liability for a married couple filing jointly, particularly where both partners have equal wage income and one or both have dependent children. This is sometimes referred to as a “marriage tax penalty.”
In some cases, though, married couples filing jointly may have a marriage tax benefit, for example, where one partner has significantly greater income than the other.
The law known as the Tax Cuts and Jobs Act (TCJA) addressed the individual tax rate bracket structure’s previous contribution to a marriage tax penalty by equalizing married filing jointly tax amounts with those of two single individuals combined (each with half the amount of taxable income of the joint filers), up to the bottom threshold of the highest tax bracket.
The TCJA, however, left other factors contributing to a marriage tax penalty unchanged, and some TCJA changes increased the penalty in certain instances.
Head-of-household filing status provides a clear tax advantage to unmarried couples with qualifying children or other individuals, unchanged under the TCJA. The structure of the earned income tax credit also favors lower- to middle-income single parents to a greater extent than their married counterparts.
The TCJA’s limitations on itemized deductions for state and local taxes and mortgage interest may also increase the marriage tax penalty where two individuals combined have a higher limitation threshold than a married couple.
Thresholds of combined total income for taxability of Social Security benefits may similarly favor unmarried couples.
See full article by clicking Amy J.N. Yurko et al., The Marriage Tax Penalty Post – TCJA in the AICPA Tax Advisor (June 1, 2019).
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..