First time filing married filing jointly (MFJ) this year and out of curiosity, I compared the numbers against filling as singles (not married but filing separate). We noticed our net federal refund is significantly less (almost 3000 dollars) as a married couple compared to pre-marriage. We always thought marriage tax would only kick in for high earners (622k+?) or those with large mortgages, so we were quite surprised to see such a big difference, especially after the "TCJA".
Breakdown of the numbers
| Spouse 1 | Spouse 2 | Joint | |
|---|---|---|---|
| AGI | 117000 | 113000 | 230000 |
| Deductions | 26000 (itemized) | 12500 (Standard) | 26000 (itemized) |
| Federal tax liability | 16000 | 18000 | 37000 |
| Federal tax withheld | 19000 | 16400 | 35400 |
| Refund | 3000 | -1600 | -1600 |
Looking at the numbers, we think the issue is that we lost an entire standard deduction as a result of the SALT cap, and that led to a 3000 increase in federal tax liability.
Is this to be expected, and if we are missing anything? I feel that our situation is pretty standard, dual-income with W2s, a mortgage, and no side business. Most of our families and friends told us that marriage would be a tax reduction and obviously, we are not seeing that.
On a related note, what are some of the financial benefits of marriage if both spouses earn similar incomes? Currently, it does not seem like there are many scenarios in which MFJ would come out ahead in our situation.
[edit] I want to clarify, the comparison is between MFJ and filing as single (not married filing separate)which we were able to do last year prior to our marriage.
Submitted February 19, 2022 at 08:42PM by Mailboxkey https://ift.tt/GvZeohb
