Planning Tax Filing for the Newlywed. Married Filing Jointly
As a newlywed, it’s important to be aware of how your married status can impact your taxes. Several key ways married filing jointly or separately can affect your tax situation. Knowing this information can help you make the best decision for your circumstances.
If you were married since December 31, 2021, you are considered married for the full year and can file your taxes as Married Filing Jointly or Married Filing Separately. For most married couples, filing jointly is more tax advantageous. However, there may be reasons to file separately that make more sense for your specific situation. Use our PriorTax.com Tax Calculator tool to find out which filing status you should use on your next tax return.
For many newlywed couples, married filing jointly is the best option. This can provide significant tax breaks, like a larger standard deduction. However, there are some situations where it may be better to file separately. For example, if one spouse has high medical expenses, or if you want to keep your liabilities separate (debt, alimony, etc.), then filing separately could be the right choice. Ultimately, the best filing status for you depends on your unique circumstances.
So, if you are married, you have the option to file your taxes jointly or separately. If you choose to married filing jointly, both you and your spouse will report your income, deductions, and credits on the same tax return. You will both be responsible for each other’s tax liability. This means that if your spouse owes any taxes, penalties, or interest, you will be responsible for paying them, even if you had no income on the return.
If you believe you should not be held responsible for some of your spouse’s tax liability, you may qualify for Innocent Spouse Relief. Alternatively, if one spouse is not responsible for the other spouse’s debts, they may be able to request a portion of the IRS tax refund from the IRS. This is known as Injured Spouse relief.
Keep in mind that even if only one spouse works or has taxable income, you can still select married filing jointly status. But if you do so, you cannot claim your spouse as a dependent on your tax return.
2022 Tax Brackets Married Filing Jointly.
Tax brackets are based on your taxable income, which you receive after taking all of the money you make and subtracting any tax breaks you are entitled to. This is the tax bracket where your final dollar of income falls, and thus, the highest tax rate you will pay. With the marginal tax rate, you pay this rate only on the amount of your income that falls within a specific bracket.
This pattern continues as your income grows, adding up the amount taxable in each bracket up to the next higher threshold. Incremental amounts of your income are taxed at varying rates, with rates increasing as you reach each of the current system’s seven marginal levels.
You can determine which tax bracket you are in by dividing the amount of income you owe into each applicable bracket. Here are the tax brackets for the 2021 and 2022 tax years and how you can calculate which bracket applies to your taxable income. To calculate your effective tax rate, take the total amount of taxes you pay and divide this number by your taxable income.
Your effective tax rate will be far lower than your rate on your tax bracket, which is claimed on just your highest-end earnings. Whether you make $40,000, $400,000, or $40 million in annual income, the top $10,000 earned is taxed at the same rate (10 percent).
You pay 10% of your taxable income up to $9,875, 12 % of amounts between $9,876 and $40,125, and 22% of amounts above that ($85,525). That leaves just $3,625 of your income — that is, anything above $86,375 — taxed at a rate of 24 percent, for a total tax bill of $870. After that $30, the next $45,850 of your income ($40,526 to $ 86,375) is taxed at the 22 % rate, which comes to $10,087 in taxes.
The next $30,575 of your income (from $9,951 to $40,525) is taxed at the 12 % rate for another $3,669 of tax. Each dollar from the top $9,951 to $40,525 is taxed at $995 (10% of $9,950) plus 12 percent in brackets. For example, if you earn $40,000 in 2021 and are filing as single, the first $9,950 is taxed at 10%.
The total rate on our single filer’s $80,000 of taxable income could be closer to 12 % or lower. The lowest rate is 10 percent on single filers making $10,275 or less ($20,550 for married couples filing jointly).
This tax laws gimmick makes some married couples filing jointly pay a higher tax than if they were single (typically, in cases in which spouses earn similar amounts). For 2022 returns, this tax-law twist is possible only for married couples who have combined taxable incomes over $647,850.
Increased Standard Deduction for Married Filing Jointly
The standard deduction increases for married filing jointly in the tax year 2022 to $25,900, an increase of $800 over last year. You should also note that the standard deduction for single filers will increase to $12,550 for the tax year 2021, up from $12,400 last year. For single filers and married individuals filing separately, the standard deduction increases to $12,950 for the 2022 tax year, an increase of $400. For heads of households, the standard deduction increases to $19,400 for the 2022 tax year, increasing $600. The alternative minimum tax exemption amount for the tax year 2022 is $75,900, which begins to phase out at $539,900 ($118,100 for married filing jointly, for which the exemption begins to phase out at $1,079,800).
The individual exemption amount for the tax year 2022 remains at 0, just like the previous year, and the repeal of this individual exemption is a provision in the Tax Cuts and Jobs Act. The personal exemption, which was eliminated for tax years 2018 to 2025 under the Tax Cuts and Jobs Act, would continue to be at zero. In 2021, the exemptions will begin to phase out, starting at $523,600 of AMTI for single filers and $1,047,200 for married taxpayers filing jointly (Table 4). Married filing jointly should follow the single-filer brackets, but note the top tax bracket at 37% begins to kick in at incomes above $314,150.
Married Tax Joint Filing. 37 Percent Tax on the Entire Income
If you are one of the lucky few who earns enough to be eligible for the 37 percent bracket, it does not mean your entire taxable income is subject to 37 percent tax. Many people incorrectly understand how brackets work and believe that falling into a specific bracket means they will pay that amount of tax on the entire income. Many Americans do not know where they fall on a scale that determines how much federal income tax they will pay each year.
If you are looking for the median federal income tax rate paid by the majority of taxpayers, it is a difficult number to nail down because it changes each year. Calculating what you would pay in taxes is not as easy (or punishing) as taking your taxable income and multiplying it by your tax rate. Figuring out your tax obligations is not as easy as just comparing your paycheck to the brackets shown above.
Effective tax rates do not consider any deductions, so if you are looking to approximate the share of your paycheck that goes to Uncle Sam, try using adjusted gross income. Add any allowable above-the-line deductions–such as retirement and health savings account contributions, certain business-related expenses, child support payments–and divide the tax bill by your pre-adjusted gross income. Your total taxable income tax bill is the sum of $1,027.50 + $3,780 + $7,309.50 = $12,117 (ignoring any itemized or standard deductions that might apply to your taxes).
If you make less than $100,000, use the Tax Schedules for example, in Marylands Income Tax Pamphlet to calculate your taxes. Most income is taxed using these seven tax brackets, with exceptions for some capital gains and dividends. Earned income – income that you earn through work(s)–is measured by the seven tax brackets, which range from 10% to 37%.