Married Couples Set to Pay Extra-Large Tax Hike
Friday, 18 Jan 2013 11:01 AM
It pays to be single — that is, when it comes to high earners’ tax bills.
U.S. taxpayers with income of more than $200,000 a year will see federal tax rates rise this year on wages and investments. Tax increases will pinch married couples faster than individuals, especially if both spouses work and have capital gains and dividend income, said Joseph Perry, partner-in-charge of tax and business services at the accounting firm Marcum LLP.
In the law passed by Congress Jan. 1, multiple thresholds for higher rates kick in for married couples only $50,000 above where they hit for singles. Married taxpayers with income of at least $300,000 also face limits on the value of deductions and personal exemptions that were reinstated for 2013.
“If they’re sending a message, it’s not to be married,” Perry said of U.S. tax policy. “People who are married, working, earning two good salaries, are being penalized.”
The budget deal struck by Congress and new taxes stemming from the 2010 healthcare law are exacerbating the long-established marriage penalty for high earners. The added bite will affect taxes they pay for 2013, and not the current filing season that starts this month.
Accountants and wealth advisers are recommending that high earners start planning and strategizing about how they recognize income from investments or when they take deductions.
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