2.(8 points) Marriage penalty. Suppose the tax tables are basically Single or Un
ID: 1118935 • Letter: 2
Question
2.(8 points) Marriage penalty. Suppose the tax tables are basically Single or Unmarried head of household If vour income is between Your tax is 0 and 60,000 60,000 and infinity 0 + 20% of amount over 12,000 + 40% of amount over 60,000 Married filing jointly Your tax is If vour income is between 0 and 80,000 80,000 and infinity 0 + 20% of amount over 16,000 + 40% of amount over 80,000 First couple. Taxpayer A earns 90,000 and Taxpayer B earns 20,000 How much tax would A pay as an unmarried single? How much tax would B pay as an unmarried single? How much tax would A and B pay as a married couple? Do they have a marriage penalty? If so, how much is the penalty? d. Second couple. Taxpayer C earns 55,000 and Taxpayer D earns 55,000 How much tax would C pay as an unmarried single? How much tax would D pay as an unmarried single? How much tax would C and D pay as a married couple? f. h. Do they have a marriage penalty? If so, how much is the penalty?Explanation / Answer
First Couple
a)
A's income = $90,000
Tax A would pay as unmarried single = $12,000 + 40% of $90,000
= $12,000 + $36,000'
= $48,000
b)
B's Income = $20,000
Tax B would pay as unmarried single = $0 + 20% of $20,000
= $4,000
c)
Total income of A and B = $90,000 + $20,000 = $110,000
Tax A and B would pay as a married couple = $16,000 + 40% of 110,000
= 16,000 + $44,000
= $60,000
d)
A marriage penalty is the change in a couple's total tax bill as a result of getting married and thus filing their taxes jointly.
Marriage penalty =$60,000 - $48,000 + $4000
= $8,000
Second couple
a)
C's income = $55,000
tax C would pay as unmarried single = $0 + 20% of $55,000
= $11,000
b)
D's income = $55,000
tax D would pay as unmarried single = $0 + 20% of $55,000
= $11,000
c)
Total income of C and D = $55,000 + $55,000 = $110,000
tax C and D would pay as a married couple = $16,000 + 40% of $110,000
= $16,000 + $44,000
= $60,000
d)
A marriage penalty is the change in a couple's total tax bill as a result of getting married and thus filing their taxes jointly.
Marriage penalty =$60,000 - $11,000 + $11,000
= $38,000
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