The income tax law seems to discriminate against married folks. There are several examples of tax laws that cause married folk to pay more than twice what two unmarried single folks pay.
The Standard Deduction (a choice instead of Itemized Deductions) gives married folk age 65 or older an additional exemption of $1,300. But a single person age 65 or older gets and additional exemption of $1,650 in 2020. Why the difference?
The extra capital gains tax for high income taxpayers is another example. Long term capital gains are taxed at a 20% rate for single persons at income of $441,451. But for married persons filing a joint return, the 20% rate on long term capital gains starts at just $496,601. Twice the single person income level would be $882,902. That means the tax rate jumps from 15% to 20% on long term capital gains much quicker (lower income levels) for married folk. Is that fair or reasonable?
There is an exclusion of income tax on Series EE savings bonds used for education for single persons until their AGI (Adjusted Gross Income) reaches $82,350. But the exclusion stops for married folks when AGI is $123,550.
Wait a minute. Twice the single level is $82,350 x 2 = $164,700.
Why is the married folk return exclusion stopped at just $123,550? What is the reason for that difference?
2019 Roth IRA contributions are allowed on Modified Adjusted Gross Income for single folks until their income is $122,000. Then it starts “phasing out” (not allowed) until their income is $136,999. Married folks filing a joint return are allowed to do Roth IRA contributions until their income is
$193,000. It is “phased out” when their income reaches $202,999.
Now twice the single level of $122,000 is $244,000. Why are married folks not able to do Roth IRA contributions so quickly, at $193,000 instead of $244,000? What is the reason for the difference between twice the single allowance and the married allowance before the “phase out” begins?
What is Congress thinking?
2019 Traditional IRA contributions are a deduction for single persons that have Modified Adjusted Gross (MAGI) Income up to $64,000. But married folks are only allowed to do that deductible contribution to a regular IRA for MAGI incomes up to only $103,000. Now twice the single level of $64,000 is $128,000, not $103,000. What is the reason for not having married folks able to do a full IRA contribution when their income is only $103,000, not twice the single level of $128,000? Does it really make that much difference? If Congress is trying to encourage retirement contributions, why wouldn’t married folk have the income limit of twice what a single person has?
There are many examples of married folks filing a joint return getting twice what a single person has.
Did you hear? “By the time you get your shoulder to the wheel, your ear to the ground, and your nose to the grindstone, it’s usually time for a coffee break.”