Question

Suppose that Leni and Thom are lawyers and each has a taxable income of $230,000. They can't decide if they should be married in December or in January. If they marry in December, then they are considered married for the entire tax year and could file a joint return. If they get married in January of the next year, they would file a separate return each as a single taxpayer. Examine Schedules X and Y-1. Which filing status would yield the lower tax? If so, by how much? is there really a marriage penalty?

Answer 1

neither

$0

No

Explanation:

Answer 2

Answer:The term used for the $400 difference in Alex and Alecia's tax liability is known as the marriage penalty. Option C

The marriage penalty refers to the situation in which a married couple pays more taxes than they would if they were both single and filing separately. This penalty arises due to the progressive tax system in which the tax rate increases as the income increases. When two individuals with similar income levels get married and file jointly, their combined income puts them in a higher tax bracket, resulting in a higher tax liability.

In this case, Alex and Alecia's joint tax liability is $9,300, which is higher than the sum of their individual tax liabilities ($3,900 + $5,000 = $8,900). Therefore, they are paying an extra $400 due to the marriage penalty. This penalty can be significant for couples with similar incomes, as it can impact their financial planning and budgeting. However, there are also cases in which couples may benefit from the marriage tax advantage, such as when one spouse earns significantly less than the other.

Overall, it is essential for couples to understand their tax liability and to explore different filing options to determine the most advantageous one for their particular situation. Therefore option C is correct.

Explanation: