Tax Loopholes For Married Couples

Tax Loopholes For Married Couples Explained

Is it time to think about taxes and getting married? Do you need to know how it works for tax loopholes for married couples?


The Married Loophole

Our goal here is to explain the tax loopholes for married couples in simple terms and shed some light on it.

In a marriage bonus situation, you pay less in taxes as a consequence of your married status.

The key point is, the marriage bonus is more than likely seen in partnerships where one spouse earns considerably less than the other.

For example, situations in which one spouse stays at home or has a part-time job as opposed to a full-time job are more than likely to result in a marriage bonus.


Be Aware Of the Marriage Penalty

The marriage ‘penalty’ takes effect when the taxes you pay jointly exceed what you’d have paid if you both had remained single and filed as single filers.

The marriage penalty is the opposite of what many call the marriage bonus.

If you have a look at the IRS tax brackets, you will notice that the brackets for married filing jointly isn’t double that of single filers for each income range.

  • For all those with low incomes, the marriage penalty does not usually apply.
  • For tax year 2014, the 15 percent tax bracket topped out at $36,900 in annual taxable income for single filers, whilst the upper limit is exactly twice that for married people.
  • Things change in the 25 percent tax bracket though. For a single filer, this bracket ends at an income of $89,350. If you simply double that number to get the top amount for joint filers, you’d see $178,700.
  • But, regrettably, that’s not how it works. For 2014, the 25 percent tax bracket ends at $148, 850 for married people filing jointly.
  • Therefore, they find themselves penalized for their combined income.


Tax Loopholes For Married Couples: Examples

  • If you make $50,000 in taxable income and your partner makes $15,000 working part-time, you benefit from marriage.
  • As a single person, your $50,000 income would put you in the 25 percent bracket while your partner paid in the 15 percent bracket.
  • Marriage, though, brings you down to the 15 percent bracket, since the total income of $65,000 is within the range.
  • As your incomes climb, and as partners see more equality in their earnings, the marriage penalty becomes more pronounced.
  • Take the top tax bracket: As a single person, your income has to be at least $406,750 to reach the 39.6 percent level.
  • If you’re married filing jointly, you end up in the higher tax bracket when your combined income reaches at least $457,600. That’s a difference of $50,850. In case your partner and you each earn $300,000 a year, filing individually would put you each in the 33 percent bracket.



Although it is called a ‘penalty’ when two married people have high incomes you can’t really lose if you are both earning big bucks. Power couples rule baby!

In conclusion, this is one of the tax loopholes for married couples and you can speak to a tax professional for other advantages of setting up a limited company and investing.


Are you interested to learn more?

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