Question

V. For the year 2019, tax rates and standard deduction in the U.S. are: Marginal Tax Rate Single Returns Joint Returns 10% $0 $9,700 $0 $19,400 12% $9.701 $39.475 $19.401 $78,950 22% $39,476 $84.200 $78,951 $168,400 24% $84,201 $160,725 $168,401 $321,450 33% $160,726 $ 204,100 $321,451 $408,200 35% $204,101-$510,300 $408,201 $612,350 37% $510,301 $612,351 Standard Deduction $12.200 $24.400 Handsome and Beauty are going to get married. Determine, under each scenario below, whether Handsome and Beauty end up with paying a mar- riage tax or getting a marriage subsidy (assuming they will use standard deductions). (i) Handsome and Beauty both earn $15,200 each. (ii) Handsome and Beauty both earn $212,200 each. (iii) Handsome earns $274,400 and Beauty does not work. (iv) Handsome earns $42,200 and Beauty $122,200.

Answer 1

In the Given question

We have to consider that taxable income would be arrived after claiming standard deduction.

Jointly and single in both the cases the slab rates are different and standard deduction is also different.

In case where after marriage tax payable is less than before marriage than it is tax subsidy otherwise it is marriage Tax.

Scenario 1 Handa.com and Beauty Casins 15200 each - Particulars Single Handsomeling | Beauty lins Joint Handsome & Beautylin Income 15,200 15, 200 30,400 115200x2) Standard Deduction (12,200) (12,200) (24, 400) Taxable Income 34 000 3,000 GODO Tax 300 652 300 (31000 x10Y) (3000xior) 16000 X 10%) Tax without Tax with marriage marriage = 300 +300 - 600 600 Conclusion in the given Scenario, Handsome and Beauty will end up in praying same amount of tax hence there is no marriage tox and marriage subsidy

Scenario 2 Handsome and Beauty both for $212,260_ Particulars Handsome ($ Beauty ($) Handsome & Beauty (8) 2, 12,200 212,200 424,400 2012, 200x2 Income before Standard deduction Standard Dedintion 12,200 12,200 24,400 1 Taxable incom 200,000 20,000 4. UDD Tax 44,739.13 | 44739.13 91418.5 Tax Computation 10-9700 @10% - 970 - 19400 102 - 1940 19701-39475@127. = 297741219401-159 Sp@122. = 3572-85 = 59549812% - 7146 39476-842.00 @22. = 44725X22278951-168408 @ 22). 9839. 5 8 9450 X 22%. = 19.679 189201 - 1609125292 -7652SX247 168401 - 321450 24.! 18.366 153050 x 242_- 36,732 160726 - 2,50,6002337, 239275x33, 32145) - 4,800,000 @33) - 12966.75 78550x33% - 25921.5 Total Tax per person 44,739.13 I Total Tax 91,418.5 - 89478.26 Total Tax Single = 44,739. 1382 Tax with marriage - I 91418.5 - marriage Tax - 1940.24

in the - to pay given kenario Handsome extra mandlinge. Tar and beauty 19 :24 together have Senasis 3 Handsome cases $ 234, 46 and Beauty does not wo Pantuan - Single Handsome Joint Baruty (K) Handsome & Beauty (6) Income befox dedition 274, 400 27yum Standard Deduction 24,40 Taxable Ininme 062, 200 250,00 Tax 66,42713 1 48, 349 Tax Computation 10-160725 - 3572.88 + 9839.5 0-168400 = + 18366 1940t 7146 + 19679 2875 - 31778.38 1 (As per Scenario 2 - 1684 - 2450,000 @ 242 SIGO0 x 242 - 19584 160726-204) @337. 43,375 @337. .14,313.75 Total Tax = 483 49 204,101-252200 @ 354._ 580@35% = 20,335 TOX = 66, 427013

IS. 25.12 $ 15,035.13 1440 142.20212223 14.4 Tuome T 3406 20574.35 I 2257 Tax Combitece Tox Hondaan -930 - 920 - 9701 - 30,00 - 20:302 x 12.7 - 2436 Tax for Handsome - 3406

IS. 25.12 $ 15,035.13 1440 142.20212223 14.4 Tuome T 3406 20574.35 I 2257 Tax Combitece Tox Hondaan -930 - 920 - 9701 - 30,00 - 20:302 x 12.7 - 2436 Tax for Handsome - 3406

extor Beauty 0-84.200 - 357288 +9229-5 14,38 2:38 Las bus Suevasio 2) $42-1,lo,mo @ 242 258.002926192 - Tax 2 00,574.38 حياه هافم O 78950 - 1940+7146 = 9086 (As per scenario 2) 7895) - 140,000 @222 610 50 X222 - 1343) 22,517 Total Tax Single - - Tax marriage 015 marriage subsidy - 3,406+ 20574.38 = 23980.38 $22517. $ 1463.38 In the given case savings I marriage after marriage subsidy) of Handsome & Beauty will have $ 1463.38