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Copyright (c) 1996 The Virginia Tax Review Association
Virginia Tax Review

ARTICLE: ALLOCATION OF THE JOINT RETURN MARRIAGE PENALTY AND BONUS

Winter, 1996

15 Va. Tax Rev. 489

Author

Richard B. Malamud *

Excerpt

I. INTRODUCTION

Many articles explore the phenomena of the marriage penalty, a concept where a couple pays a larger tax if they are married than they would if they were unmarried. 1 On the other hand, a marriage bonus results when a married couple pays less tax than they would if they were unmarried. 2 Married couples who have relatively equal taxable incomes generally incur a marriage penalty whereas married couples where one spouse earns most of the income generally attain a marriage bonus. 3 This article does not focus on the existence of the penalty or the bonus which results from filing a joint federal income tax return. Instead, it discusses how a married couple with separate income streams should allocate the penalty or the bonus.

II. MARRIAGE PENALTY AND BONUS -- AN OVERVIEW

A. Marriage Penalty -- Explanation and Example

Dual income couples incur the marriage penalty because they are pushed into tax brackets higher than they would be in if they were not married and filed as single. For example, if each of two single taxpayers reports gross income of $ 29,750 and taxable income of $ 23,350, 4 the income tax per taxpayer is $ 3,502.50, giving a total tax of $ 7,005 for both taxpayers. If the same taxpayers are married, their joint return gross income of $ 59,500 results in taxable income of $ 47,950 5 and a tax of $ 8,356. This hypothetical couple therefore pays income taxes of $ ...
 
 
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