Falling Off Fiscal Cliff Could Hurt Married Couples' Bank Accounts
By: Kyle Leyenberger
Updated: December 27, 2012
Lawmakers are back at work, trying to find a solution before the nation heads over the fiscal cliff, but if they fail, married couples could pay the price.
Certified public accountant Keith Glass is concerned lawmakers may let the Bush tax cuts run out.
"It could be very serious," Glass says. "The rates will change back to what they were just before all of this was passed."
That includes a so-called marriage penalty, that would cost some couples more than $2,000 in higher taxes.
"On the standard deduction for singles it's a flat dollar amount," says Glass. "Currently for the married couple it is double that."
Glass say if law reverts back to pre-Bush era tax rates, joint filers would lose one third of the standard deduction for married couples, possibly putting them in a higher tax bracket.
"You're losing 33 percent before you go to the tax table," he says "If you were in the 10 percent table, now you could be in the 15, even the 23- 25 percent table."
Glass says couples who itemize deductions will not be affected.
"For the people that own homes and things like that, they're probably still going to be able to itemize," he says.
But the imbalance could hurt those in the lowest tax bracket.
"Hopefully none of this takes place," he says. "Who knows what happens in Washington."
The marriage penalty is just one of many provisions set to expire, so just how much both single filers and married couples will have to pay next year is still up in the air.
To get an idea of what to expect try this online calculator.
Certified public accountant Keith Glass is concerned lawmakers may let the Bush tax cuts run out.
"It could be very serious," Glass says. "The rates will change back to what they were just before all of this was passed."
That includes a so-called marriage penalty, that would cost some couples more than $2,000 in higher taxes.
"On the standard deduction for singles it's a flat dollar amount," says Glass. "Currently for the married couple it is double that."
Glass say if law reverts back to pre-Bush era tax rates, joint filers would lose one third of the standard deduction for married couples, possibly putting them in a higher tax bracket.
"You're losing 33 percent before you go to the tax table," he says "If you were in the 10 percent table, now you could be in the 15, even the 23- 25 percent table."
Glass says couples who itemize deductions will not be affected.
"For the people that own homes and things like that, they're probably still going to be able to itemize," he says.
But the imbalance could hurt those in the lowest tax bracket.
"Hopefully none of this takes place," he says. "Who knows what happens in Washington."
The marriage penalty is just one of many provisions set to expire, so just how much both single filers and married couples will have to pay next year is still up in the air.
To get an idea of what to expect try this online calculator.
