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Elda Di Re, Ernst & Young partner, weighs in on how higher tax rates stand to impact those considering marriage.
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Higher taxes discourage couples from getting married.
And I got to clarify I'm all about love I love love I wanna be in love for the rest my life but it worked -- my money which is -- tax expert.
-- erase -- she -- numbers -- for -- and found that actually a couple doing really well out.
Decide to get.
They could pay Uncle Sam -- for 171000.
Dollars more than had they stayed single -- is here with us right now.
That is a year of college that the college tuition and state school every hour every year.
Crazy now there was always.
You know you always paid more when you got married prior to the increase in -- but -- it's that much more.
And that -- yacht in fact be the new higher limit for the various new tax law we got -- -- around.
Only has a gap between single and married -- 50000 dollars so the top rate comes into play at 400000 taxable income.
Up for single people but only 450 for a married couple.
So it's it's the gap that they -- between single and married -- is very narrow you always wonder the logic where this comes from and I know that you Christie's numbers I want to show everyone.
He did adjusted gross income single people we have simple things put up right now.
A facing each shows so the two people want is 201 ST fifty together -- fifty right.
And you pick some obvious.
Itemized deductions tell us about them.
So we -- charitable mortgage interest and property taxes and to keep it simple because state rates are so different for a state to state -- left that out so assumed.
No state itemize deductions so.
We had total itemized deductions of 35000.
A month and a half for each person.
And then combined.
Was 71000.
But what's interesting is.
If they'd stayed single under the new tax regime they would not lose any itemized deductions in the roles.
But in being married under the new rules they lose under what we call the they lose for an 4500.
Dollars of itemized deductions under these new roles just because they're -- this because of its -- in any move onto the personal exemptions.
Which as married people.
-- so where you had a personal exemption of 3900.
Dollars had peace states' single and so.
7800.
If you both stayed single it's completely gone and out of hours or is he got from -- working -- lost -- you're investing it -- because then you have these Medicare taxes on investment income and of course and the higher one on earned income as well that's right now that applies to lower income.
Or lower than the other adjustments so if you have about.
More than 200000 dollars of income.
If you are single or 250 again notice that small -- again.
As married you what you pay the increased Medicare tax and -- investment income it's now called the net investment income tax so.
Beat this be higher earning single person in my example single to would've had a small amount of tax under the new law haven't had stayed single.
But if he's married if they are married.
Then they pay.
Much more as a couple on that so it's on the investment income they pay 15120.
Dollars as a married couple instead of 760.
On that single taxpayer.
And 14140.
Dollars and the incremental.
Amount of Medicare tax on wages -- say you're married.
Total here is -- that's over 171000.
Dollar seventy -- -- think about it doesn't matter when you get married during the year you are considered married the entire.
Year for tax purposes you have your wedding you pay for the wedding you go to filing a joint tax return in April big surprise.
Right -- anybody things -- -- -- wedding and it's not gonna Catholic.
-- I -- don't do it anyway.
You gotta come back there because you just said interestingly enough that there are perks to be married for state planning purposes yeah -- the perks are so why why is it that you are penalized for being married a from an income tax standpoint but -- -- great perks for leading property to each other.
In an estate tax adding this is why analysts estimated sixty I'm -- about it -- a or that the night -- don't can't say I've just went for me at 171000.
