Topic: Marriage Penalty

A Redesigned Earned Income Tax Credit Could Encourage Work by Childless Adults

By :: May 20th, 2015

The earned income tax credit (EITC) lifts millions of working families out of poverty, but provides little support to workers without children and some low-wage workers married to other low-wage workers. Congress could fix this flaw by scaling back the EITC and creating a new worker credit that is based on individual earnings and not […]

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Are Domestic Partnerships A Way For Heterosexual Couples To Avoid The Marriage Tax Penalty?

By :: June 5th, 2014

In their zeal to provide a legal alternative to banned marriage for same-sex couples, some states may have created a new tax shelter for heterosexual couples. By choosing domestic partnership or civil union over marriage, opposite-sex couples are able to avoid paying a federal income tax marriage penalty, just as same-sex couples can. Over the […]

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Senator Lee’s New Reform Plan Focuses on Young Children

By :: September 19th, 2013

At an AEI panel discussion earlier this week, Senator Mike Lee (R-Utah) unveiled the Family Fairness and Opportunity Tax Reform Act. The centerpiece is an additional $2,500 tax credit for all children under age 17. The plan retains the $1,000 child tax credit under current law. Unlike the current credit, the new credit would not […]

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A Closing Window for Some Same-Sex Couples to File 2012 Tax Returns

By :: September 5th, 2013

Last week’s IRS ruling on same-sex marriages received a lot of attention. Going forward, a same-sex married couple must file federal income tax returns as married, regardless of whether the state where they live recognizes their marriage. In addition, same-sex couples may—but don’t have to—file amended returns for some earlier years to recoup any extra […]

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IRS Recognizes Same-Sex Marriages, Regardless of Where Couples Live

By :: August 30th, 2013

Just two weeks ago, I discussed potential tax issues a same-sex married couple could face if they live in a state that doesn’t recognize their marriage. Yesterday the IRS ruled that, for tax purposes, such couples are married regardless of where they live. That ruling answers the question of what filing status the couple must […]

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Same-Sex Couples after DOMA

By :: August 15th, 2013

It’s been less than two months since the Supreme Court ruled part of the Defense of Marriage Act (DOMA) unconstitutional and the fallout has only begun to settle. Nowhere is there more uncertainty about the effects of the ruling than regarding federal taxes. The court struck down Section 3 of DOMA, which denied federal recognition […]

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What Will Supreme Court Decision on DOMA Mean for the IRS?

By :: June 26th, 2013

I’m celebrating today’s Supreme Court ruling on the Defense of Marriage Act (DOMA) with my friends and relatives whose marriages are today, finally, accorded equal status to mine. But I am a tax geek and couldn’t help but think about the consequences of a hundred thousand or so married couples who will now file joint […]

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As Marriage Changes, Should Joint Filing Go The Way of Ozzie And Harriet?

By :: June 11th, 2013

Any day now, the Supreme Court will rule on whether same-sex married couples have the right to file joint federal tax returns. But Yale tax law professor Anne Alstott has me wondering whether the entire debate over the tax consequences of the Defense of Marriage Act is missing the point. In an upcoming paper for Yale’s Tax […]

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A New Marriage Penalty for High Earning Couples—and a Bonus for Some

By :: February 15th, 2013

Our new Marriage Bonus and Penalty calculator, despite all its Valentine’s Day finery, ignores the new 0.9 percent Medicare payroll tax hike buried in the 2010 health law. The extra levy affects only a few high-income couples but in very different ways. Lucky couples will collect marriage bonuses of up to $450. But those less […]

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Why Tax and Transfer Programs Often Discourage Work and Savings

By :: February 14th, 2013

Economists and many policymakers generally agree that our tax and transfer systems should promote opportunity, work, saving, and education rather than consumption. The problem is these programs often penalize people for earning that extra dollar of income. Rather than promoting work and savings, these implicit taxes punish such otherwise positive behavior. These penalties occur in […]

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