August 11, 2018 6:16 am
Very interesting Honestly between being young/early in my career and not as financially savvy I didn’t really pay much attention to the implications of But looking at the scenarios we were (and still are) not exactly in the “high-income bracket” as defined here Thank you for sharing the. Hopefully American laborers really are seeing a difference in their paychecks now with tax cuts The Michigan consumer confidence index surged to 99 from expectations of around 95-96 for February. Very interesting…I’ve always wondered about the effect of the My wife and I are under the $110,000 for now but at some point in the future we might be over I guess we better get a mortgage to get the deduction The whole system is so convoluted and complex As for social security I don’t think it’s absurd that if a person dies early the “benefits go back to the government.” It’s social security insurance and not a retirement savings account If the benefits for paid to a beneficiary I think they’d be bankrupt now In any case if a person dies early the widow(er) and minor child will still collect benefits…and the widow(er) will have increased benefits. This is going to sound “elitist” no matter how it is written but it just doesn’t make sense to give a to high income earning couples If you give a benefit to wealthy people for having kids more likely than not the kids they have will 1) have more education 2) be better prepared to add value to society This does not mean that “all rich people are smarter” rather it means “rich people can provide their children with better resources to succeed” A very different argument in the USA really makes no sense A couple of good friends are “married” but not legally They had their wedding and ceremony yet no papers were signed Why? However I can’t disagree more when you say that the only financial benefit to is SS survivor benefits What about estate advantages health care advantages auto and home insurance advantages home ownership and home capital gains advantages? Granted some of those direct financial benefits are only available given certain circumstances but what about the broader benefit of income security? There is clearly a if you look solely at federal income es but I would argue that there are broader financial advantages to be had from irrespective of the emotional component. Jeff I think the rationale Sam is using is the point of diminishing returns He is not saying you will be LESS happy if you make more than 315K after deductions; he is saying you just won’t be that much MORE happy by making more because on average most of what you would want can be acquired at the 315K income level living in most parts of the country Sam’s conjecture the amount of additional happiness you acquire does not correspond 1:1 with the rising level of income beyond. Same example of $50,000 income each mortgage but with two children It shows a but the overall amount is lower due to child credits From $11,638 to $7,863 So far so good There is hope for humanity but the government is saying you should have children as singles instead Awesome analysis! Had no idea that the situation would change so dramatically in those different situations between being married and being single Think we’ll see more high earners choose to remain single?!? What if you live together. Eric says Febru at 5:47 pm Is there still the related to the 0.9% extra medicare (single pay over $200k income and married over $250k) or was that modified with the. Nice post Sam I think is the worst when you have a high and a low income earner since the low income earner is really being ed at the marginal rate too! Right now my fiancee is in med school so we’ll get 4 years of a nice bonus After residency though we’ll have a huge But that’s why I’m starting my own businesses right now(rental online etc) so that I can deduct expenses against my small business income and then contribute the rest to a solo 401k As long as I don’t make much more than 50k should be able to shelter all. Financial Samurai says Febru at 10:17 am Want to share an example with numbers to clarify what. Those are some good real thoughts that I’m sure others are thinking about It’s a shame that the survivor benefits don’t go to a loved one and must either go to the spouse or back to the government That does NOT seem right to me If you are paying into the system all those years it’s yours or who you designate it to be darn it To me this is TYRANNY because if you don’t pay these es you get fined or go. Correct It’s stupid that a married couple doesn’t get $10,000 X 2 = $20,000 of SALT deduction Not sure what the government’s logic is on this one Perhaps the logic is now that the is abolished the benefits outweigh the benefits of doubling SALT Losing $10,000 of SALT deduction is $2,400 for a 24% bracket couple but the income savings is greater. Anon says Febru at 12:07 pm I believe most of the other deductions phase out at levels that do not double for couples So the lives on in the phase out limits But I agree it is much better than it was Still need to get rid of amt though. Henry-Etta says Febru at 5:38 pm You know what you are right I was totally wrong on the 2018 scenario and using 2017 assumptions Look at me jumping on my soap box before I looked close enough at the. I disagree that gov’t wants to penalize high income married couples If they did why then have all the other advantages I listed (most of which are only meaningful to wealthier families): estate advantages gift advantages home ownership and capital gains advantages If they wanted to penalize why then include the Social Security survivor benefit you referenced? The way I see it the is the govt’s way to recoup the costs of these other benefits To me the and related machinations seems to largely reward “traditional” 1950s style living (single-income stay-at-home spouse two kids and a mortgage) IMO this speaks more to the need for an overhaul and simplification of the code with fewer special incentives than to any pernicious plot to pilfer the public’s (p)money. Financial Samurai says Ap at 8:09 am Incredible! And one person can make up to $250,000 before the phaseout begins. Nikki says J at 8:53 am Crazy for many huh? You are in a sweet spot with your situation Congrats! Now help make everyone feel like they are benefitting financially too by spreading the world about this inequality Thanks! In today's world its rather absurd to assume that there is usually one one wage earner in a family My boyfriend and I both make decent incomes and have full time jobs We want to get married but if we do we have to pay higher es on the same income How sad is that we are seriously considering NOT getting married to save. In 1948 the United States moved to a system that ed the "Family" rather than the "Individual" This is the root of the which certainly does exist It might be more understandable to refer to it as a "second earner" For example if in year one a couple is dating and both the man and the woman have a able income of $90,000/yr they each have a obligation of $18,920 (without credits etc.) That's a total obligation of $37,840 between them If the next year the relationship has progressed and they marry they must file a joint return When they do that they will discover that their new combined obligation if their salaries have remained unchanged is $38,663 an increase of $823 over the previous year. Chris says April 3 2014 at 7:54 pm Technically it is % up until the SS cap then it is % on everything above that for Medicare. Financial Samurai says April 5 2014 at 6:46 pm Congrats for being in #5 in terms of income. Cece says April 3 2014 at 5:33 pm Care to expand on their merits in a post or here in the comments? Sounds like you are doing well with them Any strategy to consider?. Lucas says Ap at 9:24 am Md says April 5 2014 at 4:53. Reisen says Febru at 11:28 am But as I understand far fewer of us will be paying AMT under the new law I did a quick check and about 60% of filers in the $200k-$500k range (ie my household) pay AMT I couldn’t find new numbers but everything predicts it’s going to be. Lucas says April 3 2014 at 8:10 am Couple issues on your examples You are completely right The majority of middle to upper middle class couples that both work have property etc are affected by this How big the affect is dependent on how much they’re getting ed where they live etc But as a common example couple earning 200k total living in a high local state paying 10-25k in property es Losing that additional 10k deduction is equal to at least 24% of that 10k which is likely 2 weeks. There are very few instances where being married is helpful for filers One of those few instances happens when one spouse works and the other stays at home In that case where the spouse who stays at home wouldn't normally file a return they can be claimed as a standard deduction But that scenario happens in fewer than half of all s today Another area where filing jointly benefits the couple happens when one spouse makes very little income but the other filer makes enough money that they are excluded from certain deductions/credits for which the other spouse is eligible In the vast majority of cases however filing separately does not relieve either spouse of the It just relieves you of legal obligation towards the other spouses liability. So I would just prefer a neutral system that treated everyone equally Let them arrange their affairs finances personal relationships investments however they see fit Society will sort itself out in the most efficient manner – just like any other complex system We don’t need the code to manipulate it. The real is most aptly applied to a husband and wife who some years need to file separately (for a variety of reasons) If they do they are Married Filing Separately and are subjected to one of the higher rates The problem is not being able to choose to pay the lower Single rate of The breaks of Married Filing Jointly category are one issue -- does the government want to give them a break? The issue of not ing individuals the same whether married or not is another one entirely It always forces people into a legal separation or divorce before acquiring the right to file independently So this issue is all about ing an individual at a higher rate simply because he is married Highly discriminatory. Kris says Febru at 4:36 pm Financial Samurai says April 9 2014 at 2:13 pm Yes sire We will see more high income earners stay single and just cohabitate. The costs are also non-linear; whereas one person plus one person both have to eat and pay grocery bills separately if you buy higher amounts for a family of two you end up paying less per per person because of discounts for purchasing more of one particular item If they do have the same living expenses before as after it’s as a result of conspicuous consumption (and governments have always ed consumption) or perhaps they are investing surplus income (e.g in a second house as a rental) in which case they can afford higher rates From a standard-of-living perspective the reality is that two scale better than one and your costs don’t double when you marry and live together It’s therefore not a surprise that the system would reflect this. I don’t really see how a break for the wealthy is such a good thing especially with the fiscal situation… the wealthy already get a disproportionate amount of special breaks (e.g retirement accounts lower es on capital gains capital gains exemptions with the sale of a home caps on inheritance) You mention several times that you want the government out of deciding people’s lives…do you want to lose all of the advantages you have used to accumulate wealth in favor of. Ace says April 4 2014 at 2:35 pm Well… Yes I do pay considerable amount of including self-employment LLC fee etc And I do use saving strategies but I’m not anti-government. Kurt says April 4 2014 at 9:13 am The best thing about being the gov’t in that situation is that you can rewrite the rules if you don’t like the math – as many city/county/state pensioners are realizing as they face potential pension cramdowns. Ace says April 6 2014 at 3:57 pm Rich says Febru at 1:19 pm Unless I’m messing up the math this is the type of couple who would really benefit The single person earning 300K is ed at 35% on able income from 200K to 300K When they get married 200K – 315K is only ed at 24% and the final 15K is. Financial Samurai says Febru at 10:13 am Hi Johnny! My BF and I are in the same boat as you However it can sometimes be tricky to find an officiant that will “announce you husband and wife” if they don’t see the legal paperwork….it’s something about it could jeopardize their job/title This doesn’t mean you can’t find one but it might be tricky to find one on board with you plan Another idea though is a symbolic wedding! Mexico does these where it’s the whole wedding without the legal part You can do it legally in MX as well but that requires bloodwork and who wants to give blood to the MX government?? So look into a Mexican symbolic wedding I think some other Caribbean countries do it too but MX seems to be the easiest. In the eyes of the government 1 + 1 literally only equaled This is blatant anti- discrimination Discrimination is not OK even if you aren’t being discriminated against Below are examples that demonstrate the that used to occur under the old structure I used the Policy Center Calculator Example #1: Each person makes $200,000 They don’t own a home and have two children The results are the same if they have no children They pay a whopping $15,162 Financial Samurai says April 5 2014 at 6:45 am Thank you sir for supporting our country! And also allowing folks to live more comfortable lives. G says Febru at 4:16 am I would get legally married even with the for religious reasons But I’m sure glad I don’t have to pay. Md says April 5 2014 at 8:06 am Heh I meant the 1990’s! They were in their late 50’s at. That is correct Government uses laws to persuade you to stay at home and make it uneconomical for you to find outside career interests Most people have no idea about the penalties bc most people make less than 100k each But discrimination is still wrong even if you aren’t being discriminated against. Financial Samurai says Febru at 10:17 am Thought about this for a while before coming back to post I think you are missing the point that True Love is actually an action/choice of putting someone else before yourself not a feeling If you can not make a commitment to someone to go through the rest of your life with them regardless of the consequences to you then I would argue that you don’t really love them Love grows under that level of commitment especially during difficult situations Failure to understand that aspect of what true love is is a failure to understand reality as it is an unchangeable fact Cohabiting is at its core a decision that I like this other person and what I get out of this relationship but if things ever got really bad then I still want the option. Rates around the world: Do singles always pay more?David from Chicago a Living Single reader sent me this mind-expanding link documenting rates across the globe The numbers from 30 different countries were compiled by the Organization for Economic Cooperation and Development (OECD).I'm going to unveil some mighty big numbers so before you gasp keep this important qualifier in mind: These aren't just income es They include payroll es social security contributions and cash benefits. Martin says Febru at 5:26 am Also it can be interesting to compare on how it is in other countries For example in France people prefer to avoid the and go for a pacs which gives more advantage and less hassle. Kurt says April 3 2014 at 2:24 pm Best of luck! It’s nice to keep things simple Think about all the vacations you can spend with your extra tax “savings”! Check out: The Average Net Worth For The Above Average Married Couple Joe says Febru at 5:20 am I (a woman) got married late this year and am ruing not making it official Jan 1 because of the issue My husband and I make approx 500 combined split evenly and are struggling to find ways to reduce our burden I wish I had looked into this issue prior to the actual event So far the penalties (es) outweigh the benefits (only emotional). Kurt says April 3 2014 at 4:59 pm Dee says December 7 2015 at 9:21 am How about this example? One person’s income is $115,000/year and the other person is $220,000/year No children Mortgage Rental income. Example #2: One person makes $500,000 the other person makes $80,000 They own a home with a mortgage and have one child Lucky for the person making $80,000 to marry the person making $500,000 Not so lucky financially for the $500,000 income earner After 20 years this person will have paid $270,000 more in es than if he or she had stayed single or unmarried forced this person to pay an average of $13,434 more in es a year Think about what this couple can do with all. Financial Samurai says April 5 2014 at 6:47 pm Man a 3.7% bonus credit is HUGE! Congrats man! It is a head scratcher for the government to PROMOTE lower income families for having more kids with the child credit You’d think it would be the opposite if kids are really tat expensive and to grant a child no? If you make under $50,000 and have 5 kids for example it might really be hard to get ahead financially. Love this post Ive been preaching about the for years and it is the very reason my “partner” and I decided NOT to get married most people have no idea that a significantly increased burden awaits them after When you ran your scenarios for people who have kids did you include the ability to file head of household? My partner and I make ~$220K/year combined and I file her as head of household which reduces her effective. Herman says Ap at 3:49 pm Yup you sound like an a*^** and since you admit that it is ‘just business’ it confirms you are an }%^#%^ Sorry to be so blunt I agree with ‘S’….a great far outweighs everything else. No I mean that is the literal definition of a pension The price of fixed income for life is forfeiture if the actuarial tables don’t go your way I understand the impulse to hate the method of funding (es) but there is nothing unfair about the product itself. People who should know better are ignoring single people and their experiences. I can't see how the government could defend ing two people differently for the same amount of income If that isn't discrimination I don't know what is I discussed this with my boss the other day First he said "well yeah but that same amount of income is split between two people" and I said "not necessarily the other person doesn't have to work to get the break" to which he replied "well then you have one income for two people" to which I said "but there might not be anything stopping them from working they could work if they wanted to." My boss then replied "but don't you think the government should support families?" I said "that's not supporting families it's supporting romantic partnerships I have a family but I don't get a break." Haha he said "well we have to get back to work now." My boss is VERY smart and VERY progressive (married) individual but it was clear that he like so many people had never given the issue any thought before. I don’t have a problem with so much and don’t see the need to eliminate it fully What I do have a problem is how much your es social security,welfare benefits even college tuition rely on your martial status In addition not all states and localities have anti-discrimination statues regarding martial status If it’s wrong to fire someone for being single or married how is it not wrong to increase their es or make them paying more in college tuition? Here is the real home-dinger One person makes $300,000 and marries another who makes $0 They pay $35,000 in State es $25,000 in mortgage interest $2,000 in charity and have a child The $300,000 a year earner saves $11,162 a year in es I tried higher than $300,000 a year and the credit starts to decline THE IDEAL INCOME TO AVOID THE Based on my analysis the ideal income variations to avoid paying. That’s the problem with advocates of gay and lesbian equality is honorable but the institution itself is too discriminatory to the unmarried In the olden days it was worse children were called bastards and it was hard to divorce even in an unhappy Privatization has already partially occurred with pre-nup agreements and no-fault divorce laws Some have criticized these but the government has no business forcing people are being the counselor in unhappy s In addition one’s health insurance should not be affected by can you imagine a wife or husband who’s is falling apart and who’s agree to divorced but one is still pleading to be married so that one can be on health insurance? Our current code also favors divorce to an extent as alimony for instance can be an above the line deduction as couples are being hit with. Mbb_Boy says Febru at 9:48 am True but who’s fault is that? Fed doesn’t make some states have high. Kurt says April 3 2014 at 4:05 pm “That is $8,000 a year in es to pay for your whole life to get nothing in return if you die before age 64 and so happen to be single? That’s not right.” No that’s called a pension. I could bath myself in Evian water feed a village for a year and buy my parents a new home for that type of money The government is just going to. Practical Patty says July 2 2014 at 9:57 am Financial Samurai says Febru at 6:59 pm Good point about compromise With a nation divided compromise is the only way to get things done. Ace says April 4 2014 at 11:42. Great solution That’s exactly what I did and am enjoying it due to more options and freedom We are the 99 percent moshennik says The previous comment 12/6/09 is exactly what people are missing on this issue! Last year I was able to itemize deductions on our home on my return and on my then fiancee took the standard deduction we were both "single" This year regardless of how we filed: jointly or seperately we lost out on that stardard deduction and about $850 The only thing that was different this year we are a Mr & Mrs whereas last year we had different last names Is there a ? YES!!! Depending upon if you own property or not it might cost you upwards of $1000 Had my wife simply sat at home for the whole year as far as Unlce Sam is concerned that is worth a couple extra thousand dollars! The Internal Revenue Code imposes many different kinds of penalties ranging from civil fines to imprisonment for criminal evasion If you do not file your return and pay your by the due date you may have to pay a You may also have to pay a if you substantially understate your understate a reportable transaction file an erroneous claim for refund or credit or file a frivolous submission If you provide fraudulent information on your return you may have to pay a civil fraud. Krantcents says April 4 2014 at 5:46 pm Krantcents- This is a wonderful strategy I highly recommend this for married couples whenever possible Having one spouse working full time at a fairly good paying occupation with solid benefits (health insurance etc.) and the other spouse running a small business From financial/economic//family flexibility point of view; this is the optimum. Schmitty says Febru at 5:58 am well written article Just another benefit of the. Financial Samurai says April 3 2014 at 6:27 am There is no escape The government won’t make it. Financial Samurai says April 9 2014 at 2:04 pm Lucas says April 3 2014 at 10:06 am Jr says Febru at 12:06 pm When you say “equality” are you referring to dollar proportion or impact? A married couple likely does not have twice the expense that two individuals would How much should that be accounted for. No no more importantly is the post! Because I spent hours wracking my brains putting this post together trying to understand all the nuances of the implications etc Without this post there would be no comments! :) I like the fact that one can make up to $200,000 and marry someone she or he loves making $0 to save on es That’s the one positive takeaway It’s great if one spouse doesn’t have. Just ran our numbers and it looks like we’ll save 0.3% after getting married My fiance will be happy to know that we don’t have to call the wedding off. His favorite free financial tool he’s been using since 2012 to manage his net worth is Personal Capital Every quarter Sam runs his investments through their free Retirement Planner and Investment Checkup tool to make sure he stays financially free forever For 2018 he’s most interested in arbitraging the lower property valuations and higher net rental yields in the heartland of America through RealtyShares one of the largest real estate crowdfunding platforms based in SF He sold his SF rental home for 30X annual gross rent in 2017 and reinvested $500,000 of the proceeds in real estate crowdfunding for potentially higher returns. Financial Samurai says J at 9:58 pm That’s good $200,000 is the magic number Sounds like you have some good mortgage interest. There is one that hits married homeowners very hard: SALT deductions If you are single you can deduct up to $10k in SALT If you are married you can still only deduct up to $10k in SALT This really hurts married homeowners who live on the coasts especially when those areas already have high state income es. Small business owners get ed the most though You have to pay both sides of SS and Medicare Also because you are already in a high bracket (in your scenario) then all the added income gets ed at the higher rate for income purposes Unless the goal is to have losses flow through from an accounting basis even though you are making money in reality However that strategy has a shelf life and once that is done you are paying through the nose If they have a targeted break to small businesses this economy. Thanks for sharing With a divorce rate of 50% I’m not so sure helps keep people more together Maybe it does but the numbers don’t look pretty A senior government official once told me that the government uses religion to also get people to pay more es through the promotion of Furthermore we all know that the Churches are some of the wealthiest institutions on Earth I hope our country can accept all religions and people. -Finally even if you are correct that married mike has more costs than single mike and the IRS took those costs into account and gave him a break why does the IRS care that those costs are coming from Mike adding a wife rather than Mike taking in his unemployed brother or his sick aunt? Why does it have to be a romantic partnership? Tom @ Finance and Flip Flops says April 3 2014 at 9:08 am Financial Samurai says Febru at 9:05 am 1) Have a total income (MAGI) below $110,000 to be able to claim $1,000 per child credit You still get some child credit after $110,000 but there is a drastic phaseout Depending on deduction levels owning a home with a mortgage will reduce your bill further It seems that a total income level hovering around $100,000 enables couples not to pay a and potentially even get a credit 2) One person with a MAGI $300,000 or below marries someone with $0 income Example #8 ($50,000 + $0) is a common example that helps many middle class Americans Example #8 shows how you can pay no es and actually earn money with kids Example #9 ($200,000 + $0) and #10 ($300,000 + $0) are also a fantastic scenario that can help those living in high cost areas After $300,000 the credit starts to decline. Syed says Ap at 8:19 am Voltain says Febru at 4:22 am The heartland is not necessarily low We are high income in KS and pay over 6% income We also pay very high property So now we are looking to leave the Midwest. Here are 10 skills that will clarify your visions and bring you closer to your. Chris says April 7 2014 at 7:25 pm In the past I used to wonder why two individuals with high incomes or two individuals with a large income differences would ever want to get married Paying thousands of dollars in es didn’t make sense It seemed obvious that the government wanted one spouse to give up his or her career to stay at home even if there were no children to raise Otherwise why would the top rate of 39.6% for a married couple not kick in starting at a combined income of $836,802+? For 2017 married folks begin paying at the 39.6% rate once their combined income surpasses only $470,701. Tmat says Febru at 4:37 am Bren says Octo at 4:13 am Can you highlight exactly what the benefits of are for you that far outweighs the ? Why do you think two people can’t just be in love and have a family without being married? Thanks Ace says April 4 2014 at 12:32 pm Well sure… The government will waste but so does private industry and private individuals. Many religions uncouple the two constructs- in the eye of God and in the eye of the state- which religion requires legal (and in some cases penalizing) ? Bucket1 says Febru at 9:27 am Verified by Psychology Today Mjm says Febru at 12:09 pm There are still penalties on deductions for IRAs and eligibility for contributing to a. We weren’t willing to pay any es so as you know we moved ;) Actually we ended up eloping (but will have a formal wedding coming up soon) because that way if I wasn’t able to find a job in our new country I could be listed as a dependent on my wife’s (er fiance’s?) work permit I’ll try my hardest not to go on a rant about the government and es here but it really is an archaic system that seems to have been pieced together by a bunch of blind ferrets each with different objectives Talk with people in/from other countries and they find it absurd that the need for personal planners exists for the average citizen And while I may be a CPA I avoid es like the plague which is probably not what people want to hear haha Of course I use my designation for a different line of work than say being an employee at H&R block. Check this out: /blog/living-single/201004/law-review-article-es-uncoupled-singles-always-pay- There is a fallacy in your argument You are taking one person who makes x amount of money and comparing it to a couple who makes the same x amount of money and pointing out that the couple pays less in es What is missing is that it takes more money to feed shelter clothes two or more people so it's actually fair that the couple pays less es since more of their money is actually going towards expenses the single person does not pay Now if we compare one single person making x amount of income versus a married couple making twice as much money as the single person how do their es compare? I encourage you to input your own numbers and see what happens after this post as well Remember please take your anger out on the government not on me I’m just the investigator trying to shine a bright light on this ludicrous situation Just the fact that I had to spend loads of time figuring out various income permutations to see when the kicks in is maddening Example #1A Each person makes $50,000 no children no mortgage no Hooray! Moshennik says April 4 2014 at 9:19 pm Chris says April 3 2014 at 8:06 pm Since everyone believes in equality everybody should be rejoicing at our new federal income rates I personally believe that a married couple earning up to $315,000 after deductions is the ideal income for maximum happiness You’re paying a 24% federal marginal income rate and can pretty much live a comfortable life anywhere in our great country There’s really no need to slave away to try and make more Related: The Average Net Worth For The Above Average Married Couple Nice Job Bella of pointing this out to the blogosphere and Anna nice job jump starting your boss's brain on the subject The way people are ed and the way our es are used is a great source of annoyance to me So much so that I'd prefer not to think about it which may also be why I haven't even unearthed my w2s and its two days. S says April 3 2014 at 7:32 am Febru at 9:39 am It shouldn’t be accounted for at all You don’t have to be married to live in a multiple-person income household anyway – having a roommate or roommates is a decision available to everyone who wants to save money If you want to live alone you pay more Call it a privacy premium. Thank you Lucas! This calculator was baffling as hell to figure out when kids started getting added into the mix I played around with the inputs to provide as many variations as possible until the calculator and outputs really started to piss me off Great point about the phaseout over 110,000 MAGI I didn’t want to introduce the 401k and HSA variables to reduce MAGI because then you would see way too many more permutations I should have just made every couple childless to make it easier but that is obviously not realistic I’ve included another example #9 of 200K marrying someone making 0 just for you and we get a $7,330 credit which is fantastic! Example #9 is a juiced up version of example #8 and buttresses my point #3 of the ideal income combo What do you think is the total income limit MAGI for when the starts kicking in? Completely agree on the 315k maximum hallow was figure We are switching to a Roth 401k to pull as much income into the 24% bracket as possible. Financial Samurai says Febru at 6:34 pm Yes up to $315,000 for a couple is ideal depending on where you live What is your ideal couple income figure? Mark says Febru at 5:48 pm We got married when we were young and weren’t making much money at the time So I never even considered the I did start thinking about it as we got older and started making more but by then it was. The government probably would be bankrupt if SS didn’t get passed down to a close family member But we are paying into the system in the form of % in es up to around $115,000 That is $8,000 a year in es to pay for your whole life to get nothing in return if you die before age 64 and so happen to be single? That’s. I want to have kids a husband (I’m already living with my partner of 8+ years and we are going to aim to have our first kid in 2016/2017) and a stable life… just seems so antiquated silly and costly! If I got married I definitely would be more interested in being a stay-at-home mother but that would be such a waste — I’m going to work and as my salary with bonus at 30 has ranged between $120k and $150k I can only imagine I will earn that or more throughout the next 30 years Even if I consult and half that when I have young kids I’ll still make too much to see any benefit from (I’m assuming my partner will make at least $50k per year if he goes the social services route he’s thinking about… he currently makes $90k.) 2) For dual income earners- If you are below 73801 MAGI (94000 gross income) it is clear there is no because brackets are doubled up to that point Between there and MAGI of 148850 (169050 gross income) the is usually pretty minimal due to the brackets being pretty close Beyond that it definitely racks up quicker after that due to the non doubled brackets and credits phaseout limits. Andrew@livingrichcheaply says April 3 2014 at 8:09 am Posted by Financial Samurai 145 Comments Wow good thing you are in pyschology and not in any math based industry The comes about when two people make roughly the same amount of money For example if each have $80k in able income their es are $16k each or $32k total When married and having a able income of $160k their es jump to $33K So for this couple they have a $1k/yr For couples with much lower combined incomes or when on spouse makes considerably more than the other they will often see a benefit in es But to say its an advantage no matter what your income is. No Nonsense Landlord says April 4 2014 at 11:33 am I am not sure how they would save $15K What's happening to psychotherapy may be unprecedented. Example #6 Two people make $85,000 each and have no kids and no mortgage It looks like $170,000 in total income is where the income starts to. Financial SamuraiSlicing Through Money's Mysteries 2018 federal income tax brackets There are many income permutations to consider when calculating whether or not there is a marriage penalty tax or bonus However the key math to consider is at the 10% 12% 22% 24% 32% and 35% tax brackets – there is a logical doubling of income thresholds if individuals get married Therefore there is no tax penalty for any individual making up to $300,000 a year or married couple making up to $600,000 a year I no longer have to spend hours coming up with different married income permutations to figure out when tax penalties start hitting I can just tell based on looking at the graph Perhaps this is why the tax industry is so afraid of streamlining the tax system When things are easier to understand they lose business. Got an ad in the mail today from MetLife Auto so I called for a free quote The woman asked for my marital status I said that was a discriminatory question but she said that it wasn't - that it's just part of the rate such as your age driving record etc But then I asked "So are married people better drivers than single drivers?" And she said "No it's just that married drivers are usually more stab-" and then she stopped but I knew she was going to say "stable" How insulting I'm more stable than some of my coworkers who are having affairs with other married coworkers Good grief Just more singles subsidizing the marrieds as with es and health insurance Ugh By the way MetLife couldn't beat my current rate with GEICO so I had the last laugh The woman was surprised that my GEICO rate was so low I almost told her it was because I'm single thinking back I probably should have. I think overall it wil significantly reduce the for most (unless you’re in the top bracket) If you’re in a high state you’re capped at 10k for SALT for married couples but if you are two single you can both claim 20k for SALT I don’t think this will affect many couples but is somethign to consdier Otherwise the new plan essentially eliminates the S says Febru at 11:54 am If one spouse makes 300k and the other only makes 30k the one who makes 30k is still ed at the 300k rate… so why are you saying the “”. Md says April 5 2014 at 2:49 pm I thought we were going to get those types of policies from THIS President. Lucas says Ap at 1:19 pm Ace says April 4 2014 at 2:58 pm The Professor says J at 3:02 pm Then again there’s the old adage- why is divorce expensive? Because it’s. Example #5 One person makes $500,000 the other person makes $80,000 They own a home with a mortgage and have one child Lucky for the person making $80,000 to marry the person making $500,000 Not so lucky financially for the $500,000 income earner After 20 years this person will have paid $270,000 more in es than if he had stayed single or not married with the added $13,434 in es. Untemplater says Febru at 7:39 pm I want to guess the reason for the was the belief that shared costs are reduced across two people and that people who share costs would ultimately get married Not saying. Financial Samurai says April 4 2014 at 9:45 am I’ve never really explored annuities beyond a basic sales pitch with my insurance co. I think it’s great that the has been remedied Now we should actually take it a step further and offer a increasing scale of credits based on years married At the end of your podcast you asked if we want the gov’t getting involved in our personal lives I think it’s inevitable that they do and will continue to do so I think it’d be better for the gov’t to encourage citizens to get married and stay married … and have children (as they already do with the child credit) The more robust our natural growth rate and the more financially stable and strong American family units are the better our economy will be I think there’s lots of other benefits to local communities and society at large from. Mike says Febru at 4:51 pm “ I personally believe that a married couple earning up to $315,000 after deductions is the ideal income for maximum happiness” – Samurai Oh… being in the top <5% of households in one of the wealthiest countries in the world. Wow I’m happily married but I wonder if we should get a divorce $125,000 joint income no kids no property Just some student loan interest to write off We don’t WANT to own a home nor have children We just want to figure out how to keep more of our money This stuff is all so overwhelming Thanks for laying it out It is a little easier for me to understand. Are retirement accounts like the 401k only available to the wealthy? I’m not sure companies with 401(k)s can discriminate that way same with the house sale proceeds Etc If you have been discriminated against with these things I would definitely bring it up Always got to fight for equality. Personal Capital’s Retirement Planning Calculator How do your results stack up? Updated for 2018 and beyond. Harry @ PF Pro says April 3 2014 at 11:59 am Md says April 5 2014 at 4:57 am It is so much better to be worried about saving strategies! No the church and the government are separate although in some bible belt states there were convent laws to replace no-fault divorce and some states have laws against cohabiting (not sure about enforcement) of course how a license makes you less of a sinner is absurd I’m pretty sure the jews especially during abraham didn’t need a license or stamp of approval from the pagan countries to be “married” but that’s a almost separate issue (since conservatives try to link government to religion). Financial Samurai says April 5 2014 at 6:41 am […] es ($185,600 40% effective rate): The government doesn’t believe in two high-earning working spouses They want one spouse to stay at home and take care of the kids If they didn’t why did President Obama campaign aggressively for $200,000 + $200,000 = $250,000 before es go up for the top? Equality would dictate that $200,000 + $200,000 = $400,000 Living in NYC is expensive due to Federal State and City es Unfortunately NYC is where the jobs are This couple is paying roughly $8,000 – $10,000 extra a year due. Schnack says Febru at 10:26 am The is that I pay more es for my $ 50000 I earn as a married woman than I would pay if I were single because my husband's income bumps both of us into a higher bracket And yes if we earned $ 50000 together we would both receive our minimum survival expenses as exempt so we would together live on about $ 4000 more than you would have all by yourself Hardly reason to be as angry as you seem all. "what is missing is that it takes more money to feed shelter clothes two or more people so it's actually fair that the couple pays less es since more of their money is actually going towards expenses the single person does not pay." I don't get this argument at all One couple (2 people) share one house One single dude has one house How is that "more money to shelter" 2 people? I don't eat more as a married person compared to when I'm single I eat the same It costs the same My wife eats her food whether she's married to me or not It costs the same 2 people $40 a week or 1 person $20 a week each How is. Meghan says Febru at 6:43 pm I think it was in one of your email newsletters that you mentioned you seeing the stock market continuing to go up this year because the only thing that had changed at that moment was a higher bond yield It looks like you were right since the market is soaring from a week ago When I saw the stock declines I didn’t think they would stay down for long either but my reasoning was based on the cuts that the middle class received Most people saw their paychecks go up by 3%-4% which means more money in their pockets for spending A single middle income earner would have anywhere from $117-$467 more per month for spending As I learned from my college economics class it’s consumerism that keeps the economy healthy! On your questions I do think people would rather save for a house etc But es aren’t likely at the forefront of the decision tree I thought (incorrectly) I’d discovered a way around this though… – Being a single guy with one job no kids (i.e dependents) no house and no other financial obligations I had a very easy situation the first few years out of college I’d fire up Turbo have a beer and get my filing done in no time – Getting married changed that slightly I just didn’t like the impact of now having higher income and the net result on our return Alas I thought I had an option Turbo asked something about whether or not I was married on or before December 31 that year – I read that to be a “no” because we didn’t get married on December 31 I interpreted this to mean “If you’d like you can still file as SINGLE for the year you actually got married.” Oops. Financial Samurai says Febru at 10:44 pm Why is his income ed so much higher than before now? The First Million is the Hardest says April 3 2014 at 9:11 am Bucket1 says Febru at 9:35 am Coastal states (in general) incur greater costs to keep government working People on top of people is always expensive to manage Is it excessive? Perhaps. Financial Samurai says April 4 2014 at 8:45 am I think so! Especially if she hates renting or living in the existing house. One can spin all kinds of tales of moralizing resentment about how the old system “punished women who work” or the new one “pushes women out of the home” or it’s “discrimination” against somebody Treating what is unequal as if equal is bad treating what is equal as if unequal is bad the problem is you’re never going to get agreement on what’s equal and what’s not. Moshennik says April 5 2014 at 9:04 pm Or could be even better We could stage our firings at work get unemployment section 8 housing food stamps 20 more social programs Have a LOT more time totally stress free life let some other sucker pay. This is how you "addressed" my point: "If two people marry their total taxes are sometimes higher than if they stayed unmarried But even this is misleading because more than half the time the twosome reaps a tax bonus when they marry." Your argument that the railing of Americans against the marriage penalty is "misleading" is itself very misleading To repeat my comment about the large and well-documented tax DIS-incentives to getting married faced by some unmarried couples "those disincentives don't get canceled out for these couples just because there are other couples out there (e.g ones where one spouse doesn't work) for whom there are tax incentives to get married To make that kind of argument is idiotic." Henry-Etta says Febru at 7:08 pm I’m very curious about your comment “I would legally get married even with the for religious reasons” Rvl says Febru at 12:06 pm Wall Street Playboys says April 3 2014 at 8:17 am The funny thing is you’d think we would want to encourage high income earners to have. Don’t forget you are still better off to not be paying the interest on the debt…the benefit only makes the interest lower by your marginal bracket…so if you paid 1000 in interest and got a 250 benefit (assuming 25% marginal bracket) you still paid 750 in interest…versus you not paying any interest Congrats on getting through school with no debt you are far ahead even with no benefit. Chris Minasian says April 3 2014 at 9:08 am SOOO true!!!! Seeing it all around us… couples don’t want to split their assets and it gets ugly- fast! This post is fantastic I’ve always wanted to know where the sweet spot was and you did a nice job showing the breakdown We fall in category #5 except we have 2 kids and I was always peeved when I saw my paycheck and how married filing jointly hurt my income (by about $6000 per year) So to be clear the $13k hit you calculated in scenario #5 does or does not include the hit to the lower income earner? Not understanding how the higher earner is “not so lucky financially” when the lower earner is getting hit harder (percentage wise)! Two high (80k+) people that are married will pay more than if they were single If one was earning not much then they may save but if it doesn’t work watch out Alimony is a tough one with a low earner In many states it goes on until death. Well I ran my numbers through the calculator and found out that my bonus was 3.7% as I figured it would be pretty decent due to single income below $110k and SAHW with 4 kids Kind of a perfect storm almost Just for giggles I reduced it by putting away the max 401k (both including and not including the $5,500 for catch-up contributions) Not surprisingly to me the bonus went all the way down to 1.2% In all honesty these types of calculations just keep pushing me to maxing Roth IRAs for me and DW and putting 401k back to company match. Leigh says April 5 2014 at 12:09 pm “readers why do you think people were willing to pay thousands of dollars in the past for the privilege of having a certificate? ” If I had to guess because most people aren’t entering for purposes – but instead for religious reasons personal reasons love all. Krantcents says April 6 2014 at 10:30 am The losing scenario is your business income produces able income of $150,000 and your wife has able income of $250,000 In this case you lose the pass through deduction because your joint able income is too high The could be around $6,000. In a nutshell knowing that we have committed our lives together in a sacramental covenant (as I said I am religious) That works for me I think two people can just be in love and have a family without being married If that works for them great I think it is much easier to walk away but two people don’t have to And certainly just being married doesn’t keep two people together There are tangible legal benefits to being married – just as there are certain tangible legal benefits to not marrying The intangible benefits are the reason I married Anyway those benefits to me far outweigh the Obviously at some point the may outweigh those benefits (if only married people were to take it to an extreme). Financial Samurai says April 3 2014 at 9:53 am Paul says Febru at 11:36 pm Sam I was wondering if the SALT deduction capping at 10k includes Sales too or if that is a separate deduction all together? Thanks! I might have to write a dedicated post. Bt says Febru at 12:26 pm The major reason for AMT was state and local income/property es Since that deduction is capped at $10,000 far far FAR fewer people will be subject to. This is a big deal to me We fall somewhere near example 1 and while I knew the was probably large I don’t think I knew it was quite that large More important than just the dollar impact the whole idea of the is to me massively unfair Much has been written about the societal benefits of (especially on children) and yet you throw a stiff at people for playing by the rules and making responsible choices? Steve says April 3 2014 at 12:44 pm I brought up the idea of NOT getting married to him today and he seems really sad about it His parents were never married so I know it’s important to him but I’m hoping the numbers speak louder than feelings We can still have a ceremony and discuss our lifetime love for each other… and then pay for that ceremony and then some with the savings from not getting married! I’m still not sure… but I can’t find a good reason to actually go through with legit if we both plan to keep working. Jclimber99 says J at 8:39 pm Ran the calculator at $110K and $74K incomes (so $184K combined) no kids $20K itemized deductions Difference was only -$171 Not enough to lose. The scary part is how comparatively low the individual incomes have to be in order to be hit with the One of the reasons me and my partner decided not to get married after we had a child is the realization that we would have to pay 10k extra in federal es for the privilege to be married In the last 3 years we have saved $28k and that is the years we counted the difference I am sure the actual number is larger if we counted all the way back to when we moved in together. I am a novice when it comes to filing and all things I am newly married Using the Turbo software I entered our income figures two ways married filed jointly and married filed separately The outcome of filing separately was more advantageous How did that happen? Cindy @ GrowingHerWorth says April 4 2014 at 11:35 am It is so curious why the government would want to penalize higher income earners from having kids or getting married Why deny love? Love is all around and should. The assumption that women did not work or worked some low paying job was a cultural assumption that got embedded in the code and while the culture has changed it stuck around in the code Now that it’s gone I think that change will stick The estate comes and goes Deductions come and go Brackets and rate change But it would be politically very bad to go back to the way things were on this Whoever supported a would be accused of discrimination for writing into law that women shouldn’t work So this is a change that I think will be hard. I much prefer a neutral system as well Why should the gov’t try to persuade our personal lives? That’s not right Why are we penalizing dual income earners too? Perhaps marriage is a “stabilizing factor” in society But are we really that savage as to not have the ability to cohabitate with the ones we love and be stable as well? I’d argue divorce is extremely DISRUPTIVE hence those who never get divorced in the first place can be considered much more stable. -The progressive is based on income not marginal cost of living If it were based on living costs people who live in New York Boston and San Francisco would pay lower federal income than people who live in Boise But that's the not case If you choose to live in Manhattan you are choosing to incur a higher cost of living If you choose to marry someone who doesn't work and support them you are choosing to incur a higher cost of living But when the Federal government sees two forms both for people earning $90K they don't that same $90K at a lower rate for one guy because he lives in Manhattan and at a higher rate for the guy who lives in Boise To the IRS $90K is $90K in THIS situation In the case of however one guy's $90K is worth more than other guy's $90K. Paper Tiger says Febru at 8:16 am Tim says Septem at 4:54 pm One person makes $100,000 and has a mortgage another person earns $50,000 They have no children but it doesn’t matter even if they did because they are past the $110,000 combined income threshold to receive full child credits A $1,050 is created with their union Not egregious but not ideal Example #3 Each person makes $200,000 They don’t own a home and have two children The results are the same if they have no children A whopping $15,162 is created for these two high income earners. Financial Samurai says April 3 2014 at 8:18 am “In any case” is wrong If you are not married the widower does not get Social Security. I’m not sure I agree with you that a couple making $315,000 a year is the ideal income for maximum happiness Why would you be less happy if you made more than that? Say you make $500,000 instead You’re only going to pay an extra 3% on $100,000 Are you saying that you’re less happy paying higher marginal es? It’s not like your entire income would be ed at the higher bracket You would have more disposable income with a higher salary even if you are paying a little more. Lifetime income is compelling but at the current low rate regime is too expensive Better I think to have the 401k and then protect against longevity risk by laddering into annuities starting in the late 60s or early 70s Of course that assumes you’ve not blown a hole in your 401k. Financial Samurai says April 5 2014 at 9:03 am Kathryn Polster says Ma at 10:55 am Wow fascinating examples! I despise the bc it clearly shows how the government is stuck in the past Sadly I doubt they will ever get rid of it They have so many inefficiencies they’re not going to change anything When was the last time a front running nominee was campaigning to get rid of the ? I can’t think. Fulltimefinance says Febru at 6:47 am My understanding is the is also still in full effect. No Nonsense Landlord says April 3 2014 at 7:50 pm I think the kicks in at the alter I am not sure. You are absolutely right Thank you for pointing out the obvious Bella is doing her readers a major disservice by publishing this knowingly false and misleading information There is a and it has been well documented While she is correct that a single filer will always pay more than two people with the same income she is comparing apples and oranges You should not compare what one person would pay compared to a married couple; you should compare what the same person would pay if they were married and what they would pay if they were not married I suspect Bella published this article with an agenda of supporting gay which I am in favor of but lets have an honest conversation Shame on. Jenna says April 5 2014 at 12:44 pm If that's the amount on *a single form* that's what should be ed If both members of the couple work and earn their own money why are they then filing one form? Why don't they just submit their own forms and then everyone is treated equally and everyone is happy? Why is marital status even ON the form? -I think you can't compare it terms of Joe and Sue who are married and Mike who is single You have to compare single Mike to married Mike- you have to hold everything else equal I am willing to bet that the vast majority of the time married Mike comes out ahead of single Mike financially So if he's coming out ahead why is he being. Financial Samurai says Febru at 6:54 pm Thanks for sharing your example I hope you put that savings to. As your income goes up you should spend more time finding ways to reduce your es I see the progressive system as motivation to find ways to lower your es If you go out and start a business you can lower your es Use the as an incentive to start a business or invest in income property. But if you never marry then you’ll never have to get a divorce AND you’ll get to keep $1,000 – $15,000 more a year based on my analysis in. The way I see if if the high income earner never married the low income earner they’d have $13,000+ more a year in example #5 Is that you? I hope s/he is worth it! For the low income earner all is good cause s/he is living a better life than if s/he was single at $80,000. The reason it is so difficult to peg a MAGI where dual income earners get hit with a is that that level is actually a permutation of the brackets the two earners are in plus where phase outs are on credits and how much they contribute to a 401k or other MAGI reducing vehicles (which is why examples like you did are going to be more useful then trying to control all variables. The married filing separate gets even more tricky as you can lose some of your credits that way Example: I was helping a friend with his and his wife’s es We ran the numbers both ways and married filing separately they lost out on the educational credits for their dependent son in college making their es even higher Not sure why this happens… Glad you are saving $28,000 after 3 years and doing what you want to do Don’t let the gov’t keep. No Nonsense Landlord says April 6 2014 at 3:44 pm “If 50% of s end in divorce that still means 50% of s do not end in divorce.” True those other 50% end in death Pick your poison… Meanwhile in the case of a low income earner marrying a high income earner the low income earner’s income will just get ed at the highest marginal rate For example say you make $30,000 and marry someone making $800,000 Your $30,000 is no longer ed at the 15% rate because it is added on to your partner’s $800,000 income to be ed at the 39.6% rate Alex says Aug at 10:32 pm Financial Samurai says April 8 2014 at 6:26 pm The more the government can punish the more the government can control people to do their bidding. On the other hand you would not be wealthy if it wasn’t for the stable economic environment provided by the US Government policies And you receive numerous government breaks for your real estate and business ventures The list of government provided services is way too long to list but runs from public school education to roads and air traffic control You benefit from these You also benefit from the fact that San Francisco will not likely be invaded by any foreign army because of the very expensive but world dominating U.S Defense Department. Terri says Febru at 6:38 am Good Morning Sam If you stay single and file separately you both get the 10,000 deduction cap for s.a.l.t Married filing joint or separate can only deduct 10,000 or 5000 I believe so there is still somewhat of a correct? Last year for a married couple 100% of income over $470,700 was ed at 39.6% There wasn’t much of a difference in total es paid between married vs head of household up to $470k So if one spouse already pushed past $471k 100% of the 2nd spouses income was ed at 39.6% I was placing that assumption on 2018 You are right the tables impacting the are really different in 2018! Wow Different game We’ll have to have our CPA run it. F says J at 12:37 pm Great article Thanks for giving the many examples Is there a place where I can use to play around with our numbers? Trying to toy around the idea of ‘if it is more beneficial for the lower income person not to work’ Thanks! Financial Samurai says Septem at 2:35 pm Sorry you had to marry her! J/K :) 1) There is never any if one spouse was not planing on working So if you plan on having one spouse stay home with or without kids there is no You get a bonus from this up to income of 405000 when the brackets fully converge So you early retirement is your goal then you should definitely be married by the time you retire to max your bonus ;-) I know you have a different view off this but with 3 kids i can “earn” 57500 gross and pay 0% (which is quite a lot to live on if you have no debt) which makes deferred accounts like 401ks substantially better deal then ROTHs for. With the passage of new reform for 2018 and beyond the is now practically abolished Based on the new federal income brackets below there is EQUALITY up until $300,000 per person In other words two individuals who make $300,000 and get married for a combined income of $600,000 will pay roughly the same amount of (35% marginal rate) as if they were single Not bad given in the past they had to pay a 39.6% rate on any income above $470,701.
It wasn’t about logic it was about a compromise Remember the original plan was to get rid of the SALT deduction entirely because it doesn’t actually make sense for federal revenues to go up or down based on what states decide to do with their es CA deciding they need more money shouldn’t mean the government gets less Also it raises more money for the federal government so I’m sure there were dual incentives to kill it :) How much each reason played in the decision is subjective but I’d believe the wonks in the GOP were thinking of the former and the classic politicians were thinking of the latter David @ Zero Day Finance says Febru at 5:04 pm Bt says Febru at 12:23 pm Well it depends what your self-employed income level is compared to your spouse’s earnings If she earns more than less than $150,000 and your business income is MORE than $150,000 then. Here is the real humdinger One person makes $300,000 and marries another who makes $0 They pay $35,000 in State es $25,000 in mortgage interest $2,000 in charity and have a child The $300,000 a year earner saves $11,162 a year in es I tried higher than $300,000 a year and the credit starts to decline Derek says Febru at 9:06 am Financial Samurai says April 3 2014 at 7:47 am. Unfortunately our culture can’t yet seem to effectively separate a private/religious/personal matter with the legal/ system And our system cant seem to keep it’s judgments (benefiting the primary wage earner type family) out of our personal lives Social/cultural acceptance of the privatization of in the US would go a long way to giving payers more choice over their financial and situation. David says Ap at 7:06 pm Both the 50K of the single person and the 100K of the couple are 50K per capita The rocket science: 50/1=50 100/2=50 Reply to anonymous_hippo Quote anonymous_hippo to everyone Submitted by Bella DePaulo Ph.D on Ap - 3:07pm The objections you are raising have all been addressed Take a look. Hence perhaps life is much better being with someone than being alone Related: The Key To A Longer Life: Fearing. I can’t think of one either Maybe if Hilary became president she would would fight more for equality and simplicity The encourages one spouse to stay home and make $0 and it encourages one person with a much higher income to never marry I’m very disappointed with the government’s treatment of people They should NOT mettle in the personal lives of others. Are you speaking from experience as a business owner? There are a lot of es that must be paid to be an entrepreneur I have a post coming up I think id rather take my chances with $450,000 more in my bank and live in the woods Read this: /business/es-suck-and-make-me-want-to-shut-down-my-small-business/ /business/business--tips-to-save-you-time-and-money/ The Single tax rate should be the INDIVIDUAL tax rate After all the $3500 exemption already sets the precedence for considering individuals for certain other conveniences (even when filing in the category of Married Filing Jointly) If we file together that's good If we file separately we should be considered as individuals -- not Single or Married Anything; we should have that choice. Yes the gov’t is smart in taking as much money from people as possible Good thing the masses don’t realize this or else there would be a revolution Go. Guest says April 3 2014 at 6:31 am Figures… Thanks! Jess says Ap at 8:21 pm His favorite free financial tool he’s been using since 2012 to manage his net worth is Personal Capital Every quarter Sam runs his investments through their free Retirement Planner and Investment Checkup tool to make sure he stays financially free forever For 2018 he’s most interested in arbitraging the lower property valuations and higher net rental yields in the heartland of America through RealtyShares one of the largest real estate crowdfunding platforms based in SF He sold his SF rental home for 30X annual gross rent in 2017 and reinvested $500,000 of the proceeds in real estate crowdfunding for potentially higher returns. Of all the nations in the study the most -burdensome to singles is Belgium where singles (with no kids) pay a rate of 55%! Married couples with 2 kids pay 40% (That's the only other category in the table; the more appropriate comparison would be married without kids.)Germany is the next most onerous place for singles There they pay 52% compared to 36% for married with lightest rate for singles is in Korea at 17% (compared to 16% for marrieds) Mexico's rates are nearly as low at 18% Here's something else interesting about Mexico: It is one of only 3 countries out of the 30 in which singles do NOT pay higher rates than marrieds In Mexico as well as in Turkey (where the rate is 43%) singles and marrieds pay the same rates Greece really stands out from all the rest - singles actually pay less than marrieds (a shade under 39% compared to a. Most (not all) want more than that I wanted kids but not just for the sake of having kids I wanted kids within a I saved a lot more money before the kids and There is no doubt I would be wealthier financially without them But assuming you do want and will accept how many kids come your way then the best way to build and keep your wealth is to find the right person to marry and then do not get divorced In my ideal world the code would incentive all the things I want incentive because I think they are good for society Alas we don’t live in my ideal world and the code incentives things that I think should not be incentive or penalizes activities I think should not be penalized The reward system is all screwed up for my liking Financial Samurai says Ap at 9:39 am Save my name email and website in this browser for the next time I comment Don't subscribe All Replies to my comments Notify me of followup comments via e-mail You can also subscribe without commenting. The only reason I see to get legally married is if one of us decides to stay home with kids one day… but we can always get married THEN… and save some cash in the meantime Right? A big issue is USA’s immigration laws You have no choice but to marry your long term girlfriend if she isn’t from America She won’t be able to live in the country for long periods of time with tourist visas The year we got married was my first year working in the US after college I made $52,000 My wife couldn’t legally work so we were example #8 Now she works and I’m making more so we are starting to hit the The government are a bunch of thieves :) One of the most disappointing things about the government is their institution of the The government is smart to laud the act of in order to collect more es When you’re in love what’s an extra $1,000 or $10,000 a year in es you’ve got to pay? Love is blind and the government tries to take full advantage. Financial Samurai says J at 8:03 am You absolutely don’t need to register and pay more es to demonstrate your love for someone else! Guest says April 3 2014 at 6:22 am Does this apply even to couples who file separately? Great comment I am tired of media portraying Federal Gov’t as some sort of Pariah for restricting a “Loophole” that favors intrusive progressive liberal inefficient coastal state gov’ts a free pass to continue excessive anti-American and spend policies It should have been eliminated not just restricted I live in the corrupt state of Oregon OR hates it’s working citizens and puts them below everything else This state is looking to make healthcare a “right,” cares more about salmon and trees than citizens and makes me pay for abortions for all including illegal aliens If changing federal code can put some pressure on these insane hard blue states than electing Trump was awesome MAGA!! Posted by Financial Samurai 73 Comments Financial Samurai says April 3 2014 at 3:23 pm There is the hospital insurance too. Just think though Instead of paying $15,000 a year during a 30 year while working one could save $15,000 a year and therefore $450,000 during the same time Think how much a couple could buy with $450,000 in today’s dollars Wow. When you're married you also pay half the utilities half of any pet costs if there are kids you pay of the kids' costs (kids are always irrelevant in these discussions because single people might have kids and married people might not) You can go on each other's health insurance plans for a discount If you lose your job you might still have a roof over your head and health insurance to boot! (not every married person would of course but NO single people do!) Bucket1 says Febru at 9:40 am well said i support the “choice” thought process above. Yes es have been created to influence the choices but I was just talking about income es and the simplification of that code I feel if the name is “income ” then it should just be on “income” As far as education the type of education is a choice and should not be in the income discussion Too many people assume they need 4 6 and 8 year higher education degrees in fields that are not in demand and when they get out of school they are in deep debt and can’t find a job in their field that pays well There are many skilled trade/technical/vocational careers that pay well with less full time educational requirements. Wow My wife is a accountant and 2 nights ago she told me we would be much better off not being married from a perspective Basically she ran through scenario 3 for me However we have been married for 20 years and love each other What are you going to do? I did know someone in the 90’s who got a divorce because they wanted to sell a property that had a huge gain I cannot recall the details though. Anna says April 8 2014 at 12:15 pm Paul says Febru at 2:47 am This is such great news! I got married last year 2017 and currently doing my es I was so mad to find out I got hit with the At least its only for 1 year… I did get hit pretty hard with the 10K property limit. Filed Under: Family Finances es Author Bio: Sam started Financial Samurai in to help people achieve financial freedom sooner rather than later He spent 13 years working in investment banking earned his MBA from UC Berkeley and retired at age 34 in San Francisco Everything Sam writes is based on first-hand experience because money is too important to be left up to pontification. Yes I’m in the camp that the government should treat people equally change their old ways of thinking about how one spouse should always stay at home and get out of the business of deciding what individuals should and should not do with their lives I don’t know why the mass media and more people aren’t talking about the abolishment This is GREAT for equality Perhaps nobody has come to this logical conclusion about what the new 2018 federal income brackets mean? Is it possible folks can’t think in derivatives except me? Doubtful but maybe! It is Valentine’s week. Rights and responsibilities often balance each other out One of my frustrations is hearing people talk only of the rights that go along with being married without also discussing the responsibilities If the has really been eliminated should we also eliminate spousal social security benefits? S says April 3 2014 at 8:33 am Dee says December 7 2015 at 1:08 pm Thank you for your thoughts! I also have talked about this with my guy and he’s gonna run our 2014 es with both married statuses so we can compare all 3 options (single married separate married joint). 3) Don’t have a combined income of more than $170,000 (Example 7 with $26 ) if two people are working although at $150,000 total income (Example #2 has a $1,050 )! Baffling Best to just keep total income below $110,000 or have one spouse not work with total income at $300,000 or below The worst scenarios are when you have one high income earner marrying a low income earner or two high income earners getting married The reason is because 1 + 1 = or less e.g $406,750 + $406,750 = $457,600 for the 39.6% marginal bracket for example The government assumes one person in the will downshift or quit their jobs How sexist. Financial Samurai says December 7 2015 at 9:41 am Those are two relatively high income earners My guess is that you will see a. My husband and I are 24 yrs old each We both recently landed our first ‘real’ jobs out of college We have both worked very hard throughout college( I had three separate jobs at one point) and graduated with zero debt We would be paying less in es now if we had debt We feel like we have been penalized for our financial planning and responsibility during college It saddens me to say that government is not just penalizing marital commitment but commitment and responsibility of any sorts They seem to be rewarding people who seem to make poor decisions( married or not having kids despite low income seems irresponsible. Get the help you need from a therapist near you–a FREE service from Psychology Today. All the examples with kids are not accurate because you are double counting the child exemptions If person one and two really got married they would have 4 child exemptions not 2 if you were combining exemptions as you are combining everything else in their example maybe it would be fairer to give one person 2 kids and one of them none like most real custody sharing arrangements or just give each person one kid Example 3 – child credit doesn’t end of 110,000 MAGI it just starts to get phased out at an additional 5% rate (over the next $20000) so they technically would still be eligible for some child credit This is also assuming their don’t save any in 401k or HSA which both reduce MAGI and can help keep eligibility for the child credit (might be worth an add in the conclusion section) What if I had a able income of $50,000 and a married couple filing jointly had the same $50,000 of able income? I'd pay $8,844 How much more would the married couple pay? Their bill would be $6,698 Hey that's less! $2,146 less!Hmm well what if the married couple and I both report able incomes of $100,000? I owe $21,978 The married couple owes $17,688 Wait there's still no " " - the couple is paying less! ($4,290 less)Let's try a million dollars I pay $328,597 A married couple pays about $7,000 LESS.I kept at this for a while No matter how giant or how tiny a able income I entered into the calculator the answer was the same: Single people always pay. Hi Frankie! Your husband asks a great question and my fiance and I have already looked into this Estate es (and inheritance es if your state has it) vary state by state Typically estates are exempt of being ed until it reaches a certain value amount That amount could me several million dollars or as low as about $650,000…which is still decent Secondly it’s all about titling! Your house If it’s only in his name or only in your name and you’re worried about probate being that you’re legally unmarried you do one simple thing: you title your assets in BOTH of your names For example the *mortgage* is only in my fiance’s name just because he got a better interest rate than when I tried to get on it However that doesn’t mean I can’t also be named on the deed This idea would follow to anything else you want to be sure goes to each other if one passes away: vehicles boats rental real estate etc Whoanelly says Ap at 7:43 am Incidentally I saw this article today which I thought you might find amusing: Yes there is such thing as a girlfriend break! More reason not to get married I suppose. Here is the beautiful scenario where one person makes $200,000 and one person makes $0 They have a couple kids (doesn’t matter) mortgage interest of $18,000 pay state es of $12,000 and charitable contributions of $1,000 Why HELLO $7,330 credit! Don’t DO IT! Eject eject! j/k Congrats for getting a credit Now it’s up to you to fight for those who get penalized Equality. Great post showing how differences in single vs married brackets can really muddy the waters come time I think everyone should do a before/after analysis when they think about getting married if only for the clear-eyed knowledge that the couple will gain about their finances – an topic that can be such a challenge in many s My wife and I were each in the 180k range when we got married late in the year and I (somewhat jokingly) suggested we delay until the new year so that we would save 11k in es….she was not amused. Does it seem unfair to compare the es paid by one person to the es paid by two? Then remember that the married couple does not need to have two wage-earners and they also do not have to have any children to qualify for the break So one spouse can go to work the other can stay home and watch TV and the couple will still get breaks that are subsidized by single people. Jess says Febru at 4:41 pm The author of this article has absolutely no idea what she is talking about My "fiancee" and I are staying unmarried precisely because of the (believe me it exists in multiple forms) We both make ~90K/year and the difference filing jointly is THOUSANDS of dollars The only increases when you consider phaseout limits (roth ira child care deduction child care credit head of household etc.) I for one will stay happily single and committed. So back to the topic of this article my bf and I have been living together for 7 years now no kids no mortgage He will finish residency in a couple of months and his salary will jump from upper 60K to 300K at least and will continue to rise each year I’m currently in residency as well and when I’m done in a couple of years I will be starting out at around 200K We will both have student loans to pay back We plan to get married next year settle down buy a house and start our little family in the suburbs I’m almost positive the better decision for our situation is to not make our ’ll still have a wedding and everything but no one needs to know we aren’t legally married on paper That’s between me and him I haven’t discussed this with him yet but hopefully he agrees If not I’ll let him read this article (thanks Sam for the. Arguing that you could commit under a cohabiting relationship without getting married because you want to avoid the current consequence of getting married proves that you don’t love the person regardless of the personal consequences (that will come and go with time/ policies/etc ) I would argue the 50% divorce rate is a product of people (religious or not) totally missing the point of and/or one of the partners never really having made the choice to love the. Financial Samurai says Febru at 10:19 am What is your belief? Individuals should have equality but couples should not? If. I would agree that the reward system is somewhat out of whack As I have said I think is a net-positive for society But the divorce laws of the past 50 years have had an affect – some good some bad If 50% of s end in divorce (a statistic that may be questionable) that still means 50% of s do not end in divorce Would we be better off as a society without s at all as a stabilizing force? Maybe maybe not I tend to think not but I certainly come to that conclusion from my own personal bias I think this much is true If you are only interested in building wealth then find a partner who makes a lot of money but would allow you to split costs and do not have kids I’m not sure how long such a relationship would really last for most people but it would allow you to build the most wealth. Mr Utopia @ Personal Finance Utopia says April 4 2014 at 8:09 am That’s it – I’m getting a divorce! Bob says at 9:50 am This benefits you as a woman but no him By marrying him he stands more to lose from the arrangement. Financial Samurai says April 3 2014 at 4:43 pm You mean the government’s pension. Gothedistance says Decem at 2:49 pm I agree with Nikki on the symbolic wedding My brother and his wife got married at the court house months before they had their wedding Our family decided to do a Caribbean destination wedding for them had a symbolic ceremony on the beach (I asked my boyfriend to play officiator which he did an amazing job at) booked a nice reception at a fancy venue for 50+ guests cake band photographer the whole nine yard! Half the guests knew they were already married but it didn’t make the wedding any less special Everyone had a blast celebrating their belated “I do” Frankie says Ap at 2:33 pm If you have individual bank accounts you can make them POD (Payable on Death) to your non-legal spouse These forms aren’t always easily found on your own but just call your bank and tell them you’d like to add a POD name to your account This way if you pass away that person listed will have access to those funds For more info on state-by-state estate es and inheritance es you can start at this link and continue Googling the topic: /blog/does-your-state-have-estate-or-inheritance- They also don't have to file jointly As I understand it married couples have the choice Reply to Anna Quote Anna That's just silly Why Submitted by Anonymous on April 14 - 3:06pm That's. I wanted to follow up on this and say that @Financial Samurai is pretty much right on the money (no pun intended! lol) My fiance makes over $200K and I make over $100K We have no children We have a mortgage We have rental income We are exactly your example We had our Enrolled Agent run our es as married filing jointly and it made our es go up over $5,000! So until that doesn’t cost so much each year we’re just not going to get legally married Instead we have umbrella insurance to help protect assets if sued We have all our major assets titled in both of our names We have other paperwork in place to protect each other such as Advanced Health Directives Wills Power of Attorney and trusts Hope. Her every cent counts says September 4 2014 at 11:30 pm I happened to be researching this exact topic for a post I was writing today: Yes there is some truth to the argument that legal makes some couples stay together longer and stick it through hard times – because it’s just too complicated to get a divorce – but that doesn’t mean two people cannot force themselves into that mindset in a relationship that is a for all purposes except on the legal paper I think it’s very sad that the reason people get married — and pay more for it — is because they cannot be mature enough to remain together in sickness and health richer or poorer I’m very torn about this because I just expected to get married as an adult if I found my life partner and I indeed found him but now that I know how the government will just charge us more to be married I don’t see the point (except the SS bit but if we’re both working and making six figures then I think I still wlll do ok when I retire.) I think it’s great that their is equality for married couples for the ones that make $300K each always nice to have equality in any level In terms of getting married or not based on the I don’t think it’s a huge factor since other ones like personality and be compatible are probably more important. Financial Samurai says April 4 2014 at 12:50 pm Financial DEpendence Is The Worst: Why Every Spouse Should Have Their Own Bank Account Recommendation To Build Wealth Track Your Finances For Free: Track your finances together with Personal Capital the best free financial tool available for couples You can track your net worth stay on top of your cash flow analyze your investments for proper risk find out if you are paying excessive fees and better plan for retirement with their retirement planning calculator When the government is beating you up with the it’s more important than ever to stay on top of your finances! April 5 2014 at 12:41 pm Yep and that’s what I am doing this year I have started to refuse work as it’s not worth it for me to put in more hours considering i get to keep under 50cents on a marginal dollar. You have buttressed what America wants: one income earner one spouse with lots. Whoanelly says April 5 2014 at 6:15 pm At this time of year it can be hard to think kindly about es but they actually can be put to good use As a general rule nations that have higher rates also offer more services and protections such as health care and pensions So I'm not going to take to the streets (or seaports) to protest ation But I don't think married people should get a break just because they are married (Kids are a separate question.) And they surely should not get a break and call it a That I will protest.[UPDATE: A law professor just published an article in a law journal with the same conclusion: Uncoupled singles ALWAYS pay a I wrote about. It does take all the romance out of though when it comes down. Essentially how much are you considering marginal utility? Reply Mbb_boy says It’s great to see things have pretty much equalized in terms of es due for married folks versus single filers Hopefully the rules will maintain this going forward They needed to be adjusted forever Your line about getting a divorce if the old rules ever get reinforced made me laugh It’ll be interesting to see how much laws change in the second half of our lives I sure didn’t care or know much about es when I was younger but now I do my best to keep up with the big changes to minimize how much I owe. Ace says April 6 2014 at 1:14 pm Honestly though… It’s really stressful to be unemployed and poor The psychological damage which the lower class lives with is very real The human suffering is. 3 I roughly calculated the differences of being married though it had no effect I was just curious But with estimation software out there (turbo caster is a good one) I am always playing around with different scenarios (wife working not working # of kids increased home mortgage etc) so I guess I am nerdy about that So I disagree with you that is outdated (a different discussion for a different day) but I do think the code should be relatively neutral when it comes to single/married income levels. Financial Samurai says April 6 2014 at 2:52 pm All I ever wanted when I was paying such es was a “thank you” not a vilification So thank you!. One person makes $50,000 and marries someone making nothing They do not have a mortgage or kids If they were to have kids their $3,548 liability would decline by $1,000 per kid If they decide to have three kids not only will they not have to pay any es they’ll “earn” about $700 bucks from the government every year This is a fantastic income combination Alvin Lee says Febru at 7:16 am I think you’d like this post: Financial DEpendence Is. It used to be the only financial reason to get married is to prevent the government from stealing from you if you die before you start collecting Social Security Isn’t it absurd that if you die early your Social Security benefits go back to the government and not to a designated family member? By legally marrying someone your surviving spouse gets to at least collect your Social Security benefits when the time comes for distribution Yes there is something to be said for following tradition and being a romantic I’m sure some reading this will think “Gawd love is not just about money you know!” which is true Now finally we can all get married and not have to pay the government for such a privilege! Related post: The Average Net Worth For The Above Average Married Couple “discrimination” is really not a useful lens to look at this through Coming up with uniform rules that make people pay their fair share without inflicting undue hardship on too many people is difficult Different people are situated differently and the code necessarily “discriminates” (i.e applies different rules to different situations) in some respects It’s unavoidable even when the goal isn’t to do social engineering about the “best” kind of living arrangements The old system implicitly subsidized families on a model that was more socially normative half a century ago one primary breadwinner (usually dad) married to a spouse who’s either not in paid employment or in lower-paid employment (usually mom) Really not that different from allowing a dependent exemption for a non-disabled non-working spouse like the code does for children Frankie says Novem at 8:43 am Jclimber99 says J at 6:59 am About $5k is mortage interest The rest of the deductions are sales es charity and property es (doubled up this past year since paid in Jan. These are interesting judgements you have about people who don’t get married and who get divorced If you said this to people I’m pretty sure you will get huge backlash from millions of people Instead of judging other people how about just sharing your relationship situation? I am SO glad that you pointed this out! I completely agree with you that this been completely overlooked by the media I just got married last year and we are most similar to Example #1 For 2017 we will be paying ~$20k extra to the government for the privilege of having a piece of paper with our names on it Had the change been announced earlier we probably would’ve delayed getting married until 2018 In other countries like Canada es are paid individually The bracket doesn’t change based on your marital status I’m glad the US is finally modernizing its code (with respect to ). I just get angry every two weeks when I get my pay stub and the first thing on the top of the page under my says in capital letters "MARITAL STATUS: SINGLE." It just seem so absurd to me that that is on my PAY STUB For work For which I do a job and get compensated accordingly and pay government es with I just keep wondering my pay stub should care whom or whom not I am sleeping with! My pay stub doesn't say that I'm female it doesn't say what my ethnicity is what my religion is where I went to college or grad school what my SAT scores were how many goals I scored in 4th grade soccer because none of those things are important to put on a pay stub but marital status is the most important right on the top in capital letters. Alas I wouldn’t suggest doing it if you are faint of heart At times it can be downright scary … even more so than being married with dual incomes and less kids With that being said I believe that the 401k pre- savings will become very effective when we start loosing the huge deductions for the kiddos. Example #3: Credit One person makes $60,000 the other person makes $40,000 There is no mortgage and zero kids We have a winner! Because the combined income is under $110,000 the couple can decide to have a kid and claim $1,000 per child to lower their es even further to $10,638 from $11,638 Financial Samurai says Febru at 10:17 pm Living Single Great news! Not that it effected us before We were the humdinger example at #4 If one wanted to count pennies the double home dinger is having a spouse that also run airbnb/is self employed (from $18k to $40k/year) so they get to stuff their own 401k :) hehe Secrets out! You’re right on one hand but I can also choose to invest in my business I don’t like controls or regulation but those are legitimate deductible expenses and so are the accounting/legal expenses to reduce my es As a business person I have a lot more latitude to make those decisions Yes it reduces my profit but I can use every other provision to my advantage too For example I deferred es when I used a 1031 exchange for my income property. Honestly it’s “generous” that the Fed cares at all how much you pay in state es Logically it doesn’t make any sense for there to even be a deduction Why should Fed get less money because a state decides it wants more? Or vice versa in an alternate universe. My guess is that you believe that truth or at least morality is relative so you probably won’t agree or possibly understand my perspective (which has nothing to do with trying to make myself feel superior as I am very acquainted with my own failings and selfishness) I will point out that the inherent contradiction in that world view is that all truth is relative except the fact that truth is relative which is absolute (which is impossible if all truth is relative forming a completely illogical basis) For your reference I have been married to my wife for 8 years and we have 3 children (6,4,2) together I would be love to hear your perspective on why you think reality/morality is different or explain more of what I understand it to be if you were interested But this thread probably isn’t the best forum Feel free to email me if you would. Financial SamuraiSlicing Through Money's Mysteries
Tj says February 6 2018 at 8:26 am It would be interesting to see how things change with this new. Would love to have article on rental property/air bnb related write-offs/deductions “stuffing 401k” as self employed (I assume S corp setup is necessary) For those here…likely already maxed their 401k at employer so you can’t do another 18k as self employed right? Ms Conviviality says Febru at 9:15. Ace says April 4 2014 at 9:23 am I’ll second that! es are the least of your problems! That was an mistake I won’t forget (and my wife likes to remind me of it each year :) ) It’s good to not forget you’re married. We weighed our (~$30k/yr) vs the economies of scale of shared health insurance ($3500/yr) & gym membership ($2k) and calculated we could come out $25k/yr ahead by not legalizing our $25k/yr after- money! The new changes do help some as you note but ing 100% of my husbands income at 37% (vs %) removing his $10k salt etc is still a $25k+/annual for us Never the less we were UP financially in 2017 by not making our legal and will be up in 2018 and we are happy as clams to have a “private ” It’s interesting however that despite how happy we are personally (and satisfied with our legal dodging of the ) some people we know question the strength of our because it isn’t legal Because the more complicated es are the more power the government has over its people Think about all the penalties the government collects too for people who do their es wrong If the government can charge a married couple more in es without having to explain why how genius. Alex says Aug at 10:35 pm You fail to factor in how higher income families got screwed I would posit that most higher income dual earning families live in higher states on the cost With the recent changes to the regulations we lose the deduction for state income and the majority of the deduction for the property So our AGI will be higher pushing us into brackets that will make the changes essentially. Meghan Anderson says Febru at 6:20 pm Yep! And you’re not missing anything. Financial Samurai says April 6 2014 at 2:55 pm In response to the article the logic is so flawed that it is laughable Has the author even opened up a 1040 booklet before? Read through the descriptions of who qualifies for each break and it is clear that hard working dual-income married couples get absolutely screwed by comparison to everyone else If you are two single people living together please enjoy every break Have 'dependents' living with you even if you're unmarried? Bonus you're the head of a household! Married with one person staying at home we reward such sloth! Our codes are a joke! It's time to stop penalizing the hardworking people in this country and stop rewarding laziness and irresponsible actions Single people have nothing to complain about you are given a fair shake Hell if you have kids before you're married its like you won the lottery! It's when you get married that Unlce Sam decides he will punish you unless you live like a family from the 50s! Once income. Can I just tell you how thankful I am right now for this post (or more importantly the comments)! I’ve spent a lot of time recently considering the financial implications of my relationship: Pensions savings es incomes inheritances social security… When/whether/how you marry can have a huge impact on your financial life! Relationships are supposed to be all about love and dreams and looking at the financial aspect makes it start to seem cold and calculated Finances aren’t going to be the deciding factor in my relationship but I’m glad to see I’m not the only one taking it all into consideration! Financial Samurai says April 3 2014 at 3:22 pm I have a feeling that many women are not going to be amused! :) So if you and that special someone are living together in a property you own don't rush to get married it'll. Woody says Febru at 6:05 am I pay a but it’s mostly because I would qualify as a head of household (higher standard deduction/ bracket threshold than single) and get the full dependent credits. Financial Samurai says Ap at 8:44 am Financial Samurai says April 9 2014 at 2:08 pm Don’t ever let your wife stop working! We stay at home men. Just re-read this post as a friend was dealing with the …you did a great job of explaining it with the examples Forgot about my previous comment but I might have misunderstood the part relating to social security I was saying that a widower or minor child would collect social security if you died early…thought you said the contrary in your post You commented “If you are not married the widower does not get Social Security”…if you are not married then you are not defined by Social Security as a widower =) Also while I do feel it’s a little unfair that an early death causes you to lose the money you paid into the social security Insurance fund…the other readers made good points relating to pensions annuities and also certain insurance policies. Look at this post and the article it links to for a more complete discussion of the issue you raise and related issues: /blog/living-single/201004/law-review-article-es-uncoupled-singles-always-pay- Financial Samurai says Ap at 1:51 pm Kate says Febru at 8:56 am Financial Samurai says April 5 2014 at 6:44 am Cindy @ GrowingHerWorth says April 4 2014 at 12:07 pm Well yes of course the post! But I love and cherish all of your posts so that’s. Our social welfare systems for one thing reward a unmarried family since a lower income family will qualify for food stamps housing subsidies and medicaid etc by staying unmarried rather then having a two working parent household - this is a big reason why lower income couples never even think about a legal Furthermore the comparison can be done on the website you claimed not by comparing a single person unmarried income vs a married couple with equivalent income The comparison should be made by taking your income obligation as filing single VS filing Married filing seperate (from spouse) Here you are the same person but simply because you are married you have a big jump in income es Literally one checkbox for married means higher income es Nobody has been able to explain the logic behind this. Jibola says J at 5:32 am I had always wondered of the reason you never got married was financial I have my answer. Hard to imagine people revolting and fleeing major metropolitan areas with whole foods and local fast casual dining at every corner for rural america but maybe Amazon and others can even the playing field a little Personally – I’d love to recede from coast if I could still get my gourmet food delivered and get my kids into good schools. With all due respect it’s very hard to feel sympathetic about people with a $400,000plus household income whining about es $15,000 is not exactly a life changing amount for this couple (that doesn’t mean I consider it fair) The larger and more likely cost is the impending divorce after about seven years of That is “lifestyle alternating”! Her every cent counts says September 4 2014 at 11:47 pm Love this post! I was just writing a blog post on this exact topic ) because I’m of age to get married and now don’t. Yes Bella says that in the article But they are still paying less in es than the single person who is earning $180,000 alone For any level of income there is a benefit of being married and filing jointly over being single and filing alone You are comparing a cohabitating couple to a married couple Both couples You have to compare the married couple (household) to the single person (household) Also the law doesn't differentiate dual income married couples from single income married couples as Bella points out So if I am single and live in a single income household I am ed X-amount but if I am married and living in a single income household I am ed X-y I make the same amount of money either way The only difference is that in one situation I am single and in the other I am married And I'm being ed differently based on that *one* characteristic Why do I as a married person deserve to keep more of my income than I as a single person? I’m glad to see these comments still going because this topic is of great interest to me! I mentioned to my husband the topic of (at least officially) not being “worth it” from a standpoint After he was done being insulted he mentioned the problem of inheritance When you are married and one spouse dies the deceased spouse’s property automatically goes to the surviving spouse without estate (unless you specifically designate a different beneficiary in your account) I guess there are problems with estate es if you are not legally married? Maybe someone could weigh in on this? His point is that by not being married you save es now but could be burned down. The comments here are fascinating! I think is a huge scam… but it’s hard to not get married in our society I have a boyfriend we’ve been together 8 years- and we”re going to be together for the rest of our lives and have children (hopefully) and all that – so why pay more for just because we want the government to approve our ? […] and promise to write laudatory words about government-backed things such as Clash For Clunkers the ROTH IRA conversions and ation based on sexism I mean if the median household income is […] Once you start making 400k you will whine about es too We are right in that range maybe 450k this year Our es will end up being about 180k total (including state and payroll ) It’s exceptionally painful To think how many toys I could buy with these money instead it’s wasted on moochers. Jason says Febru at 5:32 am I don’t own annuities and won’t for many decades if ever I am familiar with annuities because I’m paid to be (I work as a corporate 401k and pension plan sponsor) To anyone reading this I’d say to follow the advice of Warren Buffett and only own what you know That includes annuities Salesmen love to sell annuities because they (can) garner huge fees and come in so many flavors (fixed variable indexed deferred with death benefits or without) In the face of this most consumers suffer from such an information disadvantage that my blanket advice would be to stay away (especially variable and indexed annuities whose fee structures are often so opaque that you may as well just assume you’re getting ripped off) Now that I'm married my wife's income is added to mine So her income is now ed at a much higher rate as before We are now paying MORE es than if we just stayed single THAT. Save my name email and website in this browser for the next time I comment Don't subscribe All Replies to my comments Notify me of followup comments via e-mail You can also subscribe without commenting. Ace says April 5 2014 at 1:38 pm Bingo! And you’ll be happier and less stressed too! Time is more valuable. I think $250,000 is pretty ideal for a couple or family of three For a family of four $400,000 – $500,000 could be good How do you get away with not doing anything for money as a man Steve? Share us your secret! What does your. Cool Spot says Febru at 6:43 pm “What is your belief? Individuals should have equality but couples should not? If. Untemplater says April 4 2014 at 8:37 am Sign up for the private Financial Samurai newsletter! As a small business person I recognize the considerable value government entities provide me although I do frequently disagree with specific issues (well alright sometimes many specific issues! LOL!) I enjoy clean drinking water and breathable air! Regulations and code are a nuisance but they are written in “blood” There are reasons for why things are done the way they are These reasons need to be understood before changes. Read this and the article it links to for an answer to your question: /blog/living-single/201004/law-review-article-es-uncoupled-singles-always-pay- Cindy @ GrowingHerWorth says April 3 2014 at 7:48 am Johnny says J at 1:46 pm I like the link to that poor guy in California! LOL! California is quite a bit more challenging wise (I know from personal experience) But it has a large population with wealth (at least real estate wealth) so there are many customers to sell too The property issues are really complicated out there I’m much happier in Illinois I pay my $250 LLC fee and file my sales return and life is good Not that complicated I probably would never consider basing a business out of California unless it was extremely profitable (or potentially extremely profitable) If you are interested in experimenting with different small business ideas; I think it would be best to base in a different state. /blog/living-Single/201004/law-Review-Article-Es-Uncoupled-Singles-Always-Pay- And follow the link in that post to the original article. I think the correction to the is good I also think the $10K maximum for Property is a step in the right direction and it should be further reduced over time to a $0 deduction In fact I am in favor of simplifying the code and get the Federal Government out of the “deduction business” and income without all deductions which are based on peoples’ choices So remove the personal deductions based on number of dependents (personal choice) remove the deduction for charity (personal choice) remove the deduction for sales (personal choice available to those in states with no state income ) remove the state income deductions (personal spending choice). The government promotes lower income childbearing because they need more workers You keep your working class numbers high but you keep their spirits controlled by religion and television and their social power low in order to maximize the output and profit You don’t want the upper levels creating revolutionaries with actual monetary power; you need them to concentrate on business. "what is missing is that it takes more money to feed shelter clothes two or more people so it's actually fair that the couple pays less es since more of their money is actually going towards expenses the single person does not pay " Just because you're single doesn't mean you're living alone You may have children or dependent adults etc And by your logic singles would then be required to pay not just more but twice as much The fairness of that escapes me. Nicole says Ap at 5:19 am Jeff @ Maximum Cents says Febru at 7:17 am Financial Samurai says April 9 2014 at 2:05 pm Courtney says November 9 2016 at 10:21 pm I might be missing something but the fact that the SALT deduction is $10,000 whether you are single or married (i.e it doesn’t double to $20,000 for couples) is sort of a and probably impacts a fair number of couples with moderate to high incomes who own a home with a mortgage where a $20K SALT deduction combined with mortgage interest would allow them to itemize and realize savings from other deductions like charitable contributions. Financial Samurai says April 3 2014 at 8:14 am Percentage numbers are relative not absolute They translate into different amounts varying in accordance with the independent variable Reply to Anonymous Quote Anonymous You are wrong there is so an Submitted by Anonymous on June 2 2012 - 9:26pm You totally twisted and mislead the reader of what is meant by. The only visible from the chart comes in the form of two individuals making over $500,000 a year In this case the is 2% X $400,000 = $8,000 which is not much for a $1,000,000+ income family especially since the past married income threshold was only $470,701+ at a 2.6% higher income rate So compared to the old rule it’s still a win In other words a $500,000 income earner can always pay a maximum 35% marginal income rate But once that $500,000 individual marries someone who makes $100,000 or more all income over $600,000 gets ed at 37% If the $100,000 income earner stayed single s/he could have only paid a 24% marginal income rate Another head scratcher is that the $10,000 SALT deduction does not double to $20,000 if you are married But the this rule change is most likely due to compromise.
April 5 2014 at 7:23 am I have a solution for your problem: Make. That is weird someone in their 90s wanted to divorce due to selling a property You can earn $500K free as a married couple vs $250K as a single Glad your wife and I are on the same page! But what’s $300,000 more in es over 20 years if you are in love right? A Bentley… 10 round-the-world cruises… 600 RT flights to Hawaii… tuition for two kids to private university for all four years All is good when you are. Financial Samurai says Ap at 8:15 am Good thing you are “only” paying $5,000 extra I’ve seen many worse cases with your income levels! Olderandwiser says Febru at 2:12 pm One of the reasons we married back in the day in spite of the is because there were no “but we’re in looooove”. I have jokingly proposed to my lovely wife that we get a divorce of convenience to pocket a couple thousand dollars of that we are paying! She always gives me this look that’s hard to describe She won’t take me up on the offer which might be a good thing Such is the cost of love! You should rework this article a little and re-release it around Feb 10 next year Just in time for Valentine’s day!. With a joint able income around $300k I see no reason for my boyfriend and I to get married We would pay an extra $5-6k+/year in es Someone above said that we would hardly notice that money gone but that doesn’t mean we couldn’t put it to better use than paying es Even if we don’t spend it ourselves we could use it to donate more money to causes we believe in Or as we put it go to Europe multiple times a year We didn’t ask to make this. Financial Samurai says April 4 2014 at 11:13 am We are still better off not marrying financially SALT is one reason 2 My itemized deductions were $24,000 last year so now the two of us together get my itemized deduction and his standard so that’s 32% of $12,000 3 This isn’t directly connected but the Administration’s FY19 budget would change the student loan income based repayment program so that you can no longer choose married filing separately and only count the borrower’s income If I’m grandfathered in I’m in the clear but some college aged readers wouldn’t be If we could commit 15% of his income to pay my loans that would be nice for me but we can’t for a few reasons Plus in some s people keep their finances and obligations separate and that’s okay I know I am late to this discussion but you laid out the really well My husband made $360,000 and I made only $47,000 last year (only worked part of the year) I thought I withheld the appropriate amount from my paycheck but because of my job (I was a SAHM the year before) we ended up owing a ton of money The accountant ran the numbers and said I only made a net contribution of $23,000 to the household income So that’s half my small salary that disappeared I told my husband we would be better off getting divorced and he was not amused So is the government telling me it’s not worth trying to find fulfillment while my kids are at school? Can you explain how my husband’s income gets ed at 39% and I effectively get ed at 50%? I know these a “rich people problems” and nobody will sympathize but I put in my day’s work like everyone else Thanks. Financial Samurai says J at 6:20 am Who says I’m not married? :) Ok Not sure how 100% or his income could be at 39.6% or 37% since that’s the highest marginal income rate but if you or your CPA say so then that’s all that matters since you’re filing your returns. Would I say no if he really wanted to get married tomorrow? No I wouldn’t because I do love him we have a son and I’m somewhat traditional but it’s certainly a reason I’m happy with the status. Sign up for the private Financial Samurai newsletter! Wow what an eye opener I’ve heard about the but never seen it laid out like this We’re thankfully currently in the category of one person earning a lot and the other earning nothing (my wife is staying home to take care of our son) Still able to get the full child credit because of 401k and HSA contributions I hope we can maintain this ideal situation as it’s working out great for the family. Es are created to influence our choices Everything is a choice If you drive a car you pay gas Unless you’re talking about specifically deductions? IA that simplification of code What about education deductions? Is education a choice in today’s world? If you get married just make sure to put all your money into a non revokable trust at least 12 months prior to or make them sign a prenup and or both! You might love them at the beginning but at the end make sure you do everything in your power to ensure they don’t get a penny of your hard earned money! I sound like an asshole but it’s just business! Great read! I’ve been fidling with this concept and that same calculator you used for quite some time now We aren’t religious or care for traditions much but my GF is your typical girly girl believing in whatever romantic fantasy/rite of passage comes with After sitting her down and telling her we’d likely owe ~5k more in es a year and this number will only go up as we continue to work she quickly saw the light We also live in NYC which is probably the worst place in the country as far as es and cost of living go and there’s zero chance that either of us are capable of supporting the other We ran the calculator a few times and with our 35k of mortgage interest and property es (I made 160 and gf made 100) we get around 3k of But if you look closely at the brackets the really kicks in hard after a combined MAGI of $230k because that is where married filing jointly goes from 28%. The new system still shafts that doctor-lawyer power couple due to the top bracket ending for singles at $500K and marrieds at $600K but the “discriminatory” judgment there is that couples who are making that kind of coin can afford the hit It also creates new incentives around the margins for married couples at lower income levels to have both spouses working because the “roof” before their combined income puts them into a higher marginal rate bracket jumps up higher which effectively means the second working spouse’s after- wages are higher In that sense the new system “discriminates” against one-income families and subsidizes (“discriminates” in favor of) two-income families Subject of course to Sam’s very correct disclaimer that it’s complicated and incentives work at the margins rather than in. Bella DePaulo Ph.D an expert on single people is the author of Singled Out and other books She is an Academic Affiliate in Psychological & Brain Sciences UCSB. Mrs Adventure Rich says Febru at 5:36 am Why should two people living off of $180K pay less in es than one person living off of $180K? Well because we have a progressive schedule and the marginal cost of adding a person to a household is real If you're confused about how additional people increase household expenditures you can review the CES I'm not comparing cohabitating couples to married couples I'm comparing one married person making $90K to a single person making $90K Guess what? The married filer pays more or their income in es than their single counterpart-even if they file separately In fact if they file separately their marginal rate increases roughly $14K sooner than a single filer (it's this same math that creates the ) and many popular and lucrative deductions/credits aren't available. Great info Lucky me I came across your site by chance (stumbleupon) I've saved as a favorite. Regarding something different social security only legally-married couples get expect to get their spouse’s SS check if they pass away BUT there’s a dirty little “secret”…saw it happen to my own grandfather His wife of 67 years passed away and because her SS check was less than his SS check he does NOT get to continue getting her check after death How messed up is that??! Have your wills written Have you health directives written!! Yes they can be challenged but honestly this is where it comes into play that no one but you guys should know that you’re not legally married That in itself is a protection if you ask me Even if you think a family member is “cool” with it don’t tell them If things ever got bad where one of you is in the hospital you are husband and wife and no one will challenge you like they will if they know you’re not really married. Stay On Top Of Your Money: Sign up for Personal Capital the web’s #1 free wealth management tool to get a better handle on your finances In addition to better money oversight run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees I was paying $1,700 a year in fees I had no idea I was paying After you link all your accounts use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms Achieving financial freedom is. You can't deny the fact many unmarried couples face large DIS-incentives to getting married That's what people mean by a " " and it's real Those disincentives don't get "canceled out" for these couples just because there are other couples out there (e.g ones where one spouse doesn't work) for whom there are incentives to get married To make that kind of argument is idiotic For what it's worth My wife and I are seriously considering *DIVORCE* solely for the purpose of saving an additional $50,000 over the next two years to put towards a down payment on our first house We will remain committed life partners We can contract between each other to get most of the same legal protections that status provides So it just comes down to: is the "warm and fuzzy" we get from the legal status "married" worth $25K/year Um but not really. When it comes to taxation we’re already taxed at higher rates the more our income goes up For couples vs singles it’s not that hard to see that one person making $200,000 plus another making $200,000 vs a couple making $400,000 are not equivalent A couple benefits from the economies of scale Two single people who live apart need to each have their own housing each purchase their own food each pay their own heating bill each pay their own electric bill each have their own vehicle etc Yet if they get married and move in together they now only need one place to live pay one set of home maintenance costs have the option to have and share one vehicle vs two etc In other words a couple’s resource scale better when they live together in a way that just isn’t possible when they are two people living apart Hey FinSam — Do you REALLY think that in the SF Bay Area 250K is the perfect income — even for a married couple with child? Oh I get the thing (No really you need to know that I GET IT…) But is there an adjustment for super expensive metros like SF and NYC? Thanks! And BTW the benefits of being married outweigh the although my wife might feel differently particularly when she is the sole wage earner — nyuk. Lily | The Frugal Gene says Febru at 4:10 am Justin @ Root of Good says April 4 2014 at 6:12 am Thoughtful response We fall into bucket 1 I’m not happy one of us loses our SALT but at least net/net the is reduced Our SALT impact is mainly a loss of deducting state property es where we have a home value comfortably above the average I rationalize it as a luxury and I’m OK with that considering the convenience we derive from the location for both of us to work in very good jobs The government got this one right in. Hey I’m a woman and I’m totally on board with avoiding to reduce es! Without kids or an intention to have them I don’t see much point. Emily says April 3 2014 at 1:45 pm Why do you say SS is %? I thought. What Jason says in another comment also bears repeating: "You should not compare what one person would pay compared to a married couple; you should compare what the same person would pay if they were married and what they would pay if they were not married." Yes I agree but why should the government subsidize certain married couples and penalize the rest? The Social Security code for married couples means that if a couple (more likely a gay and lesbian couple who have been fighting for ) decides to equally share employment and child-rearing duties they get penalized by the social security and code A high income earner who’s wife or husband stays at home (more likely the former) is entitled to 50% extra social security benefits for the couple but if both had equal wages and shared responsibility they would be penalized Similary a person who makes say $150,000 married filing jointly with one spouse staying at home to not pay child-care,babysitting,camps,etc is in better financial shape then two folks making $75k each. S says April 3 2014 at 10:41 am Two reasons: 1) the es will be lower as outlined here 2) the higher income earner realized giving the government control of his assets is basically a 99% negative gamble on the court system (he knows he will lose) His wife is no slouch either clearing ~$200K But why would they pay extra to the government? makes no sense in the USA anymore If the girl loves you she doesn’t need a contract A ring a ceremony and her friends and family should be enough Government/court involvement is just adding complexity The system doesn’t even have the correct reward system Do we want kids to grow up with a higher probability to succeed or a lower one? And yet there is a higher on those that can provide better opportunities for their kids Blasphemy. I wouldn’t say that makes no sense in the USA anymore It’s very much so specific to the individual situation There are pros and cons even outside of religious moral or reasons. “but honey if we get divorced we’ll pay less in es and then we’ll be able to save up for the down payment on a house more quickly.” Think it’ll work? Frankie says Ap at 1:36 pm Nicoleandmaggie says Febru at 5:00 am Equality for individuals or equality for couples? This is one of those iron triangles You can’t have a progressive system individual equality and equality for couples at the. I disagree with the first comment It's all relative if you have a married couple both working compared to a single working individual it all balances out. My fiance and I make the same income $60K Individually we are in the 25% bracket When we get married we will be in the 28% bracket and pay more In addition my itemized deductions were $10k (twice the standard deduction) last yr So I got $10k in deductions and she got $5450 (standard) If we were married the standard deduction is $11900 Which is $3550 less in deductions Filing: married filing separately is even worse because if i itemize she has to also (we lose) If we both take the standard deduction we lose So how is it. […] would like to ensure your Social Security benefits don’t go to waste a good strategy is to delay for as long as possible to avoid paying the then get legally married at the age of 61. Mr Freaky Frugal says Febru at 5:10 am “Readers why do you think people were willing to pay thousands of dollars in the past for the privilege of having a marriage certificate?” Thank you very much for your thoughtful and quick response I am shocked that I gave up my summer vacation (didn’t accrue any vacation days yet) and put my kids in camp only to make that little I do feel pressure from the job market to work–I feel like I would be permanently unemployable if I have another long period of unemployment at my age But the government penalizes me for working–so I’m screwed either. David says Febru at 6:30 am Sure can Just treat every individual the same regardless of their marital status. Credit Example #7 One person makes $60,000 the other person makes $40,000 There is no mortgage and zero kids We have a winner! Because the combined income is under $110,000 the couple can decide to have a kid and claim $1,000 per child to lower their es even further to $10,638 from $11,638 What don't you get? Let me break this down for you: My wife and I got married last year in So for 2008 before we got married we each filed separately For her 2008 return my wife got about $5,000 back from the IRS; for my 2008 return I owed an additional $2,000 Last year in our incomes stayed constant and our withholdings stayed constant The only thing that changed is we got married The result: we now owe an additional $23,000+!!! The only thing that changed for us is we got married How is the $26,000+ net increase in es. Financial Samurai says April 4 2014 at 11:45 am $450,000 is $450,000 Ace! Can’t poop. Financial Samurai says April 9 2014 at 2:11 pm Alrighty! Glad women are supportive of not getting married either! Financial Samurai says April 3 2014 at 8:40 am Andrew says March 3 2017 at 9:32 am Lucky for us we are not blind We don’t mindlessly follow everything our politicians have to say We question why the government suddenly allowed Roth IRA conversions during the height of the financial crisis We think for ourselves and that’s why the lot of us are going to be much better off than the rest This post will present examples of various fictitious couples with various income levels and deductions to give you an idea of how much extra you must pay the government in order to get married All data comes from this calculator by the Policy Center. Financial Samurai says April 3 2014 at 9:53 am You know for a CPA who decided to relocate and avoid es like the plague THAT IS SAYING SOMETHING! Filed Under: es Author Bio: Sam started Financial Samurai in to help people achieve financial freedom sooner rather than later He spent 13 years working in investment banking earned his MBA from UC Berkeley and retired at age 34 in San Francisco Everything Sam writes is based on first-hand experience because money is too important to be left up to pontification. The es are so esoteric I doubt is really the real reason to get avoid getting married If my fiance tells me that I wouldn’t believe her There goes another excuse :) Anyway I think it’s good More equality is nice Now we just need better equality in. Henry-Etta says Febru at 9:01 am In 2017 100% of his income would have 39.6% plus state of 9.9% because my income would put all of his income at my highest marginal rate This is in contrast to the ~27%ish federal he would pay as single HoH- he earns about $200k Financial Samurai says April 3 2014 at 8:08 pm Gotcha I’d rather be the government Also id much rather have a pension than a 401k wouldn’t you? With the passage of new reform under President Trump the is now practically abolished in 2018 and beyond Based on the new federal income brackets below there is EQUALITY up until $300,000 per person In other words two individuals who make $300,000 and get married for a combined income of $600,000 will pay roughly the same amount of as if they were single If two $500,000 individual income earners decided to get married they only have to pay an extra 2% at most on $400,000 of combined income under the new plan e.g their marginal rate goes up to 37% on income above $600,000 = $400,000 = $8,000 in. Check out: Why I’m Investing In The Heartland Of America Dave @ Married with Money says Febru at 5:57 am Ccjarider says Febru at 10:53 am Nikki says Novem at 1:37 pm "why should two people living off of $180K pay less in es than one person living off of $180K? Well because we have a progressive schedule and the marginal cost of adding a person to a household is real." -If both people in the couple earn equal or close to equal income then yes the system is fine (I think) Each person is basically ed on their own income $90,000 at pretty much the same rate as the single person earning $90,000 But when you've got a couple filing jointly that have very disparate incomes you've got a problem We then ran another scenario where I made 175k and she made 150k (combined of 325k) and the more than doubled to 6k! And then we added scenarios where we had kids and another property rental income etc and we easily surpassed 10k Safe to say we know what must be done now Nevertheless we will still have a wedding rings and all the other nonsense because well? We can and it’s a good party However we will NOT go to the courtroom to sign that piece of paper stating we’re “legally” married Because why must I have the government tell me we are committed to each other? That little piece of paper could cost of up to half milion dollars by the time we’re done working! And even if we were religious I’m not sure why that piece of paper is so important because the ceremony is at a church administered by a priest no? Not some paper pusher at the local courtroom. Thomas @ i need money ASAP! says April 6 2014 at 10:14 am Leigh says April 5 2014 at 11:11 am The annuity example I used above was for a plain vanilla (inarguably the best flavor) annuity called a single premium immediate annuity (SPIA) Laddering them – or buying another SPIA every 3-5 years – is a way to protect against interest rate risk (e.g annuity prices are expensive now because of the persistently low interest rates but maybe in 5 years they will be more normal and annuities will present a better value) Everything has caveats of course: .com/sites/rickferri/2012/09/04/immediate-annuities-arent-for-everyone/ I agree with anonymous_cat the first to comment You are comparing apples to oranges in salary If I make 50k and a husband and wife make 50k combined it isn't the same no matter how you add it up It costs more for 2 people to live on 50k than one How do the numbers compare if a single person makes 50k and the marrieds. Cindy @ GrowingHerWorth says April 3 2014 at 8:52 am Financial Samurai says Febru at 6:57 pm Makes sense I agree with the logic but where do we draw the line with what the gov’t should meddle with? Henry-Etta says Febru at 7:44 pm One of my favorite topics thank you for addressing! I remarried a couple of years ago and we chose to not legalize our union specifically because of the I learned the first time around. Might be worth an example of a higher income earner say 200k marrying someone who plans to stay at home (or not earn anything) This is one of the better bonus scenarios – close to $6k by my calculations Important to point out that es are actually lower for most married people (besides high income dual earners) But even if es are a bit higher for some people being married decreases a lot of other expenses due less duplication Of course it sounds like you are trying to make the case for cohabiting vs getting married in that case Now you are in the rhelm of morals vs just straight expense calculations. Johnny says February 6 2018 at 7:17 pm Financial Samurai says April 4 2014 at 11:47 am Jack says Febru at 11:58 am I’m old fashion and religious so I see many benefits of I would not want to raise my kids outside of though I know many people do But that wouldn’t work for me I think is a net positive institution for society To answer your questions: 1 Yes I am willing to pay more in es to be married because the benefits of (for me) far outweigh the 2 I’m of the opinion that the code should not penalize married couples nor should be in the encouragement business (even though I am a supporter of the institution) It should be neutral on it so that people can organize their lives however they want without having to think of consequences Financial Samurai says April 4 2014 at 8:44 am April 4 2014 at 4:23 pm Financial Samurai says Febru at 10:04 am Too early to tell whether I’m right or wrong But over the long term I hope I’m right. Your email address will not be published Required fields are marked *Comment Name * Email * Website Steve says Septem at 12:24 pm Reisen says Febru at 6:05 am Thanks for the analysis Sam I don’t remember seeing this highlighted in the media which is surprising given I would think the would have been seen by the public as unpopular Biased media? Mark says Febru at 7:44 pm In 2018 100% of his income would be at 37% as opposed to an est of ~25% In both instances he would also lose HoH status (we own 3 residences and each have children) his child credit and my ability to consider our 3rd residence where we support grandma a “2nd home” We both itemize 2018 limitation of SALT in our high SALT state causes further insult to the rate I had our CPA run the numbers for 2016 and 2017 so I’m confident in what would be our personal net I think the foundation calculator underestimates the but I’m not sure exactly how. Your email address will not be published Required fields are marked *Comment Name * Email * Website Agree with you here 100% MD The red tape a small business has to jump through and the multiple fees and es a small business owner has to pay makes people NOT want to start small businesses here in California. Based on the above examples from a perspective it seems clear that you should only get married if your contemplated partner makes a similar level of income up to around $100,000 a year or you anticipate your spouse having zero income If both of you made much more than $100,000 a year you paid a How much you paid depended on the number of kids and deductions you had And given most $100,000+ a year jobs are located in high cost of living cities where housing education and es are already high paying a was infuriating Related: Scraping By On $500,000 A Year: Why It’s So Hard To Escape The. Savvyfinanciallatina says April 3 2014 at 7:19 am Wow didn’t know that the kicked in at the $ figure It seems like the government just wants us to keep working so that they can more and more out of us es + death = certainty. Mbb_Boy says Febru at 9:43 am Financial Samurai says April 3 2014 at 8:13 am Kurt says April 3 2014 at 3:52 pm Example #4 Each person makes $200,000 but this time they have $45,000 in deductions from a mortgage and property es They have two children under the age of 17 The deductions drop their total bill down to $92,089 from $104,987 in the previous example but if they weren’t married their combined es would only be $76,825 (17% lower). This wouldn’t be highlighted in the media (at least for positive reasons) because look at the numbers used in this post… e.g two couples making over $200K each The majority of this country WANTS this exact couple to may more in es not less Highlighting these examples would garner less support for the bill than it already did for ‘helping. Here are 10 skills that will clarify your visions and bring you closer to your. Tom Sagete says at 11:49. Jon says Aug at 1:57 pm Rutleyh says Febru at 6:02 am Wait until you see how gains are treated when you have your own business That pass through rate gets reduced A nice little hidden surprise my CPA wife just found that will. S says April 3 2014 at 7:35 am A follow up when it comes to love and and finances it is not the that will kill you financially Its the divorce That is a wealth killer So if you marry make sure you marry right and don’t screw. Mike @ Balanced Dividends says Febru at 6:02 am Nice post Sam Mrs BD and I are happy overall with this aspect of the recent changes. Given we know that the top 1% income earner makes roughly $400,000 a year it’s safe to say that less than 1% of Americans will still pay a Therefore if you’ve been holding off on getting married until the situation gets sorted out now is the time! If the ever gets reinstated you can always get a divorce The only clear financial benefit I see for getting married is Social Security survivor benefits Under current law if your spouse dies you get to keep all the accrued benefits If you are not legally married then the government gets to keep all the es you’ve paid into the system if you have no children Talk about a bad deal for the American people.