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Frank DiPaola,
EA
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Tax Accountant |
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Marriage Penalty
Relief
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This
law has been revised on October 4, 2004, with the "Working
Families Tax Relief Act of 2004"
Click here for updated information. |
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The new tax
law increases the standard deduction for a married couple filing a joint
return to DOUBLE the standard deduction of an unmarried individual filing
a single return. This increase is phased-in over 5 years beginning in 2005
and will be fully phased-in for tax year 2009 and later.
Table1 below
shows the standard deduction for married couples filing a joint return as
a percentage of the standard deduction for single individuals during the
phase-in period. |
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Table 1 - Phase-In of
Increase in Standard Deduction for Married Couples Filing a Joint
Tax Return |
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Tax
Year |
Standard Deduction for
Joint Filers will be .... |
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2005 |
174% of the standard
deduction for a person filing as single |
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2006 |
184% of the standard
deduction for a person filing as single |
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2007 |
187% of the standard
deduction for a person filing as single |
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2008 |
190% of the standard
deduction for a person filing as single |
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2009 & Later |
200% of the standard
deduction for a person filing as single |
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EXAMPLE:
Assume it is tax
year 2005 and a single person gets a standard deduction of
$5,800*. A married couple filing jointly will get a $10,092
($5,800 X 1.74) standard deduction.
*This number is
fictitious and is only used for demonstration purposes. |
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The tax act
also increases the size of the 15% income tax rate bracket for a married
couple filing a joint return to DOUBLE the size of the tax rate bracket
for an unmarried individual filing a single return. The increase is
phased-in over 4 years, beginning in Year 2005 as shown in Table 2 below. |
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Table 2 - Phase-In of
Expansion of 15% Tax Rate Bracket for Married Couples Filing a Joint
Tax Return |
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Tax
Year |
15% Tax Rate Bracket for
Joint Filers will be .... |
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2005 |
180% of the 15% tax rate
bracket for a person filing as single |
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2006 |
187% of the 15% tax rate
bracket for a person filing as single |
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2007 |
193% of the 15% tax rate
bracket for a person filing as single |
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2008 & Later |
200% of the 15% tax rate
bracket for a person filing as single |
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EXAMPLE:
Assume it is tax
year 2005 and a single person has a 15% tax rate bracket that
ends at $28,500*. A married couple filing jointly will have a
15% tax rate bracket that ends at $51,300 ($28,500 X 1.80)
*This number is
fictitious and is only used for demonstration purposes |
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Click here to return to "Economic Growth & Tax Relief Reconciliation
Act of 2001" |
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