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Home > Money & Services > Taxes   »   Pay More or Less When Filing Married?

 
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Old Aug 22, 2008, 01:25 PM
neiko2823
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Pay More or Less When Filing Married?

My husband and I just filed our w4's as married. He got his first pay check and recieved $120 MORE than usual. He asked the pay check company and they said that was due to his filing as married. She said he would have to pay taxes this year becuase of it. That just does not sound right. He has additional money being removed from each pay check and I feel they entered something wrong and this is not due to filing as a married person. He claims 0 is that what is wrong? Any advice would be great!

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Old Aug 22, 2008, 02:17 PM   #2  
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Married status generally pays less taxes.
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Old Aug 25, 2008, 10:12 AM   #3  
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Up to about four years ago, that was true.

However, starting with 2003 tax season, Congress removed the "marriage penalty" and made the tax rates for Married Filing Separately equal to the Single tax rates.

Now, there are a number of credits that you CANNOT claim when you file Married Filing Separately which you CAN claim when you file as a Single person, but if these credits are not an issue on the return, the Single person will pay the exact same tax on the same income that a Married Filing Separately person would pay.

All of the above deals with the FILING of the tax return.

Regarding the WITHHOLDING of taxes, if taxes are withheld at the MARRIED rate versus the SINGLE rate, LESS taxes are withheld, because the tax tables are designed with the assumption that the spouse is NOT working and therefore would be adding a second exemption and doubling the standard deduction WITHOUT additional income being added to the paycheck.

These days, that condition is the EXCEPTION, not the rule.

Most couples have BOTH spouses earning a paycheck. Since the FIRST DOLLAR of the secondary income is being taxed at the marginal tax rate (usually 15%, but often 25%) of the LAST dollar of the primary income, couples will typically UNDER-withhold because each couple withholds as if they were the SOLE income source.

The result of this mistake is that the couple's first joint return often has a LARGE balance due, i.e., the couple has to write a check of several THOUSANDS of dollars, or enter into a payment plan because they do not have the money.

It is a nasty surprise that I deliver at least a dozen times each tax season.
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