Joint Income Taxes, Tax Brackets, What's Fair?

[Shagarat 0]

My husband cannot understand why his income will be taxed at the same rate as my income (when next April 15th rolls around).... considering that I am making CONSIDERABLY more $$ than he is... I tried to explain about JOINT INCOME TAXES, etc. but it was like talking to the wall... He comes from a country where almost no one pays taxes, and they get nothing from the Government in return... so this is whole tax thing is a new concept...

I am self-employed so I pay a BOAT LOAD of taxes... I make quarterly payments and then typically owe another CHUNK of $ on April 15th... His Federal Tax Bracket is 10%, mine is 28%. Our joint filing tax bracket will be 28%, so that means if he pays 10% I'd be making up the other 18%.

If we filed Married but Separately, his would still be 10% and mine would be 33%! (If I make as much this year as I did last year...) So I guess I'm supposed to pick up the 18% he doesn't pay, rather than face paying another 5% on my earnings.... Guess it all depends on how much he earns... whether 18% of that is more, or 5% of my earnings is more... UGH!

When he got his first job I suggested that he claim 0 dependents if he wanted to make sure he wouldn't have to come up with any more $$ in the future. (and I figured I'd not ask him to contribute any more $ come April 15th if he already had the maximum deducted, even if it wasn't at the full tax rate we're going to be hit with...) Since obviously they can't figure out at the restaurant he works at what our joint income is... But this wasn't acceptable to him, after he talked to his friends who told him to claim himself, AND ME as dependents so he could keep more of his paycheck.. (They don't know how much I make, nor do they have wives who even WORK... much less wives who are self-employed and in the 28% bracket...)

IF he planned to make significant contribution from his earnings to the household, I might see it differently... but he will likely be only making enough to send support to his children and his elderly Mom back in the "old country"... and keep pocket $ for himself.

I'm the one who is providing for all of the living costs for both of us, and since he failed to save up enough $ before he came here (as I suggested he should) to leave his family able to manage while he went through the immigration process, (thinking he'd get a job on about Day 3 in the USA) I've been sending money every month to THEM!

Guess I feel like paying the taxes means I"ll be subsidizing his income, so he can have more money for his dependents (of which I am NOT one...) and himself, and maybe a little left to start paying me back (his vow) for the money I've spent on them for many months...

Am I being selfish? Heartless? Nit-picky? Cheap?

He lives the life style of my income level... but it doesn't cost him a dime... I am totally in agreement with him supporting his dependents. (however he is supporting them in a lifestyle that is far beyond his means... IF he had to support himself, he could NEVER send them the amount he sends now...)

I was thinking that if he doesn't want to pay the extra 18% taxes, he could give me rent and pay his share of the utilities, food, insurance, etc. Which of course would leave him NOTHING to send to the "old country"...

It's not like whatever he manages to save will someday be mine... He will leave everything to his children and expects me to leave everything to my children... (guess you can figure out we're not young...)

What's fair? I'm really perplexed over this...

[iLoveAPolishGirl 0]

The answer is simple... what ever your accountant tells you will result in the lowest possible total taxes for the both of you combined, regardless of who earns or pays what. You are a team! What's up with all this him vs you? Working on a quick divorce or something?

There is nothing wrong with separating income to provide yourselves some feeling of individuality, but as far as the US gov't is concerned you are basically a single taxable entity now, even when filing separately. He is not "paying taxes at your rate" you are jointly paying taxes a rate determined by your combined incomes. If his income is that significantly less then yours, however, you are probably building a serious problem that will ultimately rip your relationship apart if you continue to treat it as you currently are.

I highly recommend 1) talking to some other accountants.. as a self-employed person there are most likely a number of options available for you to significantly reduce your tax rate, such as investments in your company, etc. and 2) seek some counseling on ways to better handle the financial aspects of your relationship before it ends up being fought over in court by expensive divorce lawyers.

dvc

[TayRivers 4]

My husband cannot understand why his income will be taxed at the same rate as my income (when next April 15th rolls around).... considering that I am making CONSIDERABLY more $ than he is... I tried to explain about JOINT INCOME TAXES, etc. but it was like talking to the wall... He comes from a country where almost no one pays taxes, and they get nothing from the Government in return... so this is whole tax thing is a new concept...

I am self-employed so I pay a BOAT LOAD of taxes... I make quarterly payments and then typically owe another CHUNK of $ on April 15th... His Federal Tax Bracket is 10%, mine is 28%. Our joint filing tax bracket will be 28%, so that means if he pays 10% I'd be making up the other 18%.

If we filed Married but Separately, his would still be 10% and mine would be 33%! (If I make as much this year as I did last year...) So I guess I'm supposed to pick up the 18% he doesn't pay, rather than face paying another 5% on my earnings.... Guess it all depends on how much he earns... whether 18% of that is more, or 5% of my earnings is more... UGH!

When he got his first job I suggested that he claim 0 dependents if he wanted to make sure he wouldn't have to come up with any more $ in the future. (and I figured I'd not ask him to contribute any more $ come April 15th if he already had the maximum deducted, even if it wasn't at the full tax rate we're going to be hit with...) Since obviously they can't figure out at the restaurant he works at what our joint income is... But this wasn't acceptable to him, after he talked to his friends who told him to claim himself, AND ME as dependents so he could keep more of his paycheck.. (They don't know how much I make, nor do they have wives who even WORK... much less wives who are self-employed and in the 28% bracket...)

IF he planned to make significant contribution from his earnings to the household, I might see it differently... but he will likely be only making enough to send support to his children and his elderly Mom back in the "old country"... and keep pocket $ for himself.

I'm the one who is providing for all of the living costs for both of us, and since he failed to save up enough $ before he came here (as I suggested he should) to leave his family able to manage while he went through the immigration process, (thinking he'd get a job on about Day 3 in the USA) I've been sending money every month to THEM!

Guess I feel like paying the taxes means I"ll be subsidizing his income, so he can have more money for his dependents (of which I am NOT one...) and himself, and maybe a little left to start paying me back (his vow) for the money I've spent on them for many months...

Am I being selfish? Heartless? Nit-picky? Cheap?

He lives the life style of my income level... but it doesn't cost him a dime... I am totally in agreement with him supporting his dependents. (however he is supporting them in a lifestyle that is far beyond his means... IF he had to support himself, he could NEVER send them the amount he sends now...)

I was thinking that if he doesn't want to pay the extra 18% taxes, he could give me rent and pay his share of the utilities, food, insurance, etc. Which of course would leave him NOTHING to send to the "old country"...

It's not like whatever he manages to save will someday be mine... He will leave everything to his children and expects me to leave everything to my children... (guess you can figure out we're not young...)

What's fair? I'm really perplexed over this...

I earn far more than my Husband does, but all OUR money goes into one pot and all the bills and expenses are paid from there. My Husband contributes what he can and I would never dream of asking him to pay rent or for his food. He is my husband. I never look at it being my money or his money, it is our money. I look at our taxes and I pay a far larger amount than he does but then I earn a far larger amount, so it is only right that I pay more. We are not young either but what is left after we are gone will be split between both sets of kids.

If you knew he would be sending support back to his children before he arrived then I dont see where the issue is with you having to help out with that until he has got established here in the US. I could understand if by you having to help with the contribution to his children, it left you with little or no money to pay your own bills. You have openly stated that you pay tax in the 28% bracket so you must be earning a healthy wage.

You need to sit down and talk to your husband about how you are feeling, You are clearly feeling that he his using you for your money and not paying his way.

Good Luck

[Texanadian 10]

Ah yes, it's the classic accountant vs economic brain way of thinking. We have this in our home too. Wife has the accountant way of thought while I have the economist type of thought.

Seems like your husband has been talking to the American stereotype at work. The people who think it's better to owe money at the end of the year rather than get a refund. The classic "why should I give them an interest free loan" argument. Claiming 4 as well as dependents on your witholdings from work......Personally, I hate paying taxes every week and then at the end of the year getting a bill for taxes! But I don't want a huge refund either. Something moderately small is nice though.

I think if somebody is making less than $8,000/yr (10% bracket), they shouldn't have to pay 28% on that. I'd have him pay 10% of his income to taxes. File for the married-joint. And then you fill in the rest. Let's face it, the married-joint is a huge benefit to you while not much of a benefit at all to him. So you benefit from the joint while he benefits from the lower bracket on his income.

How you split up the tax bill is up to you. But file married-joint whatever you do.

I'm not sure your husband understands that his tax deductions from his check don't save him one penny of taxation and that it all equals out at the end of the year. It's simply a pay now or pay later thing.

As for combined vs separate bank accounts. We keep ours separate. It results in waaaaay less arguments that way. We each have our own monthly bills we're responsible for.

[fozzie 41]

It depends how significant the difference in income is, if you earn twice as much as your spouse you would probably pick up the tab. Marriage is joint, so I see why many voted that way. However my wife and I keep our incomes separate, therefore if she want to buy herself some new shoes she can because its her money. Any major purchases we consult each other.

The other side of it is that one person may have the wrong number of deductions on their taxes so it would be their fault that there is a balance so maybe that person shuld pay.

The same goes the other way though, if you get a refund who gets it?

[trailmix 77]

There is nothing wrong with separating income to provide yourselves some feeling of individuality,

Since when did money = individuality.

Really the answer to this is simple.

If you are running a business here , you should fight and claw your way to getting the best possible amount of money in your own pocket.

If this is a marriage based on love, caring and mutual respect, then you will do the taxes the way it will benefit you financially as a couple.

Edited April 28, 2009 by trailmix

[john_and_marlene 162]

Here's an equitable way to divide it:

lower earners gross income / higher earners gross income * total year end tax obligation = lower earners share of joint tax burden

total year end tax obligation - lower earners share of joint tax burden = higer earners share of joint tax burden

If you earn 10% of the gross income then you pay 10% of the tax burden

If you earn 90% of the gross income then you pay 90% of the tax burden

[Texanadian 10]

When he got his first job I suggested that he claim 0 dependents if he wanted to make sure he wouldn't have to come up with any more $ in the future. (and I figured I'd not ask him to contribute any more $ come April 15th if he already had the maximum deducted, even if it wasn't at the full tax rate we're going to be hit with...) Since obviously they can't figure out at the restaurant he works at what our joint income is... But this wasn't acceptable to him, after he talked to his friends who told him to claim himself, AND ME as dependents so he could keep more of his paycheck.

I still find this suspicious. Why was this unacceptable? Obviously with you being the high income earner, it would make more sense for you to deduct him and yourself on the 1040.

I find the W4 choice for the low income earner being 0 with double exemptions to be greedy. Even more than not wanting to pay at the end of the year.

[Creel 0]

I don't even understand the question! Are you in a real marriage? Then it is just one pot of money and you both pay the tax. Whose check it comes out of or if you pay in April are really immaterial.