Two big events happened over the Summer. (1) I got married and (2) I took a new job. Upon accepted the new job, I listed myself as married on my W4. To my surprise, my take home pay is coming at a higher % of gross pay than when I was single. All other factors are equal (retirement account, insurance, etc). Further, I should be in the same tax bracket with the new job as I was with the old.
Why is this the case? Does the govt tax married folks at a lesser %?
2007-10-28 14:47:29 · 4 answers · asked by marko 1 in Business & Finance ➔ Taxes ➔ United States
You probably are not in the same tax bracket. Because you will file a joint return, more of your income is taxed at a lower rate than when your filing status was single.
In addition to the different tax brackets, by filing with a spouse you reduce your taxable income by an additional standard deduction amount of $5,350 and an additional exemption of $3,400.
SINGLE
taxable income: tax bracket
$0 - $7,825: 10%
$7,825 - $31,850 : 15%
$31,850 - $77,100 : 25%
$77,100 - $160,850: 28%
$160,850 - $349,700: 33%
$349,700 - no limit: 35%
MARRIED FILING JOINTLY
taxable income: tax bracket
$0 - $15,650: 10%
$15,650 - $63,700: 15%
$63,700 - $128,500: 25%
$128,500 - $195,850: 28%
$195,850 - $349,700: 33%
$349,700 - no limit: 35%
2007-10-28 18:29:25 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
When you filled out your w4 form on the new job you checked the married box. Because the standard deduction is higher for joint filers less tax is being taken out. This will work great if you spouse has no income, but if she has a job and you have no other changes (new dependants, itemized deductions, etc) then you will want to fill out a new w4 and check the married but withhold at the higher single rate box. If you want only a small refund both you and your wife should fill out new w4’s and do the worksheet that is attached to it.
2007-10-28 15:59:17 · answer #2 · answered by Charlie & Angie G 4 · 1⤊ 0⤋
The withholding tables for "Married" assume that you are now supporting two people on the same income and that there is no additional income in the household.
If your spouse also works, you may be in for a little surprise come tax season. Many newly married couples who both work and claim "Married" on their W4s ended up owing at the end of the year.
www.paycheckcity.com has a W4 calculator that you may want to check out.
2007-10-28 15:37:38 · answer #3 · answered by Wayne Z 7 · 2⤊ 0⤋
it because your now classed in the family tax class and not the single class.
family class as a much lower payable tax rate simply based on the fact you now support 2 and not one and it doesn't mater if your wife works you still maintain the married allowance under tax laws
2007-10-28 15:01:52 · answer #4 · answered by blackknight_1uk 2 · 0⤊ 1⤋