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Current time:0:00Total duration:3:40

Video transcript

I want to make a few clarifications on the video on the marriage penalty the first is to point out a minor arithmetic error is that when I calculated the amount of taxes to pay on this bracket so the 15% of the increment between seventeen thousand eight fifty and seventy two thousand five hundred that is actually eight thousand one hundred and ninety eight and since that was eight thousand one hundred ninety eight this right over here would have been ten dollars higher so it's forty three thousand four hundred and sixty six doesn't change at all the ideas it's actually a small amount of money in the whole context of things but I just wanted to get the math a little bit more correct but you still see that you have a marriage penalty but the more important thing that I want to clarify is I saw in the discussion on the marriage penalty videos some people saying okay fine if it costs more to file married jointly well why don't those people just opt to file as individuals and then they're just have to pay this right over here and then they could essentially opt out of the marriage penalty and I want to clarify is that that is not an option if you are married you don't use the pure individual tax schedule you don't use this over here instead if you are married but you want to file separate you use the married filing separate tax schedule and you see in this that this is this is exactly it's different it's the same as the individual tax schedule up until in these first three brackets but then as we go above that bracket it gets into the higher tax rates faster than the individual ones and it does it if you look at these brackets here you see that they are exactly half the brackets of the married filing jointly and that's because at least for this couple right over here that's making identical incomes they are going to pay the exact same amount taking into account some roundoff error for married filing separate as they are married filing jointly and we can go through that exercise so each of them had a hundred thousand and taxable income and that in couple a example that I gave and so the first ten per state thousand nine hundred twenty-five they're going to pay ten percent that's just rounding that's eight hundred and ninety 893 actually I could even say eight hundred ninety two point five if I want eight hundred ninety two point five is ten percent of that then on the next bracket they're going to pay fifteen percent so that is four four thousand nine nine dollars and then on the next bracket they're going to pay twenty five percent so 25 percent of this right over here actually I think I rounded this number but will will take into consideration a little roundoff error so nine thousand two hundred and thirty-eight and then they're going to pay twenty eight percent twenty eight percent on the increment the increment above seventy three thousand two hundred so they each have a hundred thousand one two three and taxable income subtract seventy three thousand two hundred from that then they're paying twenty eight percent on it and this gets us each of them having to spend twenty or have to pay twenty one thousand seven hundred thirty three point five in taxes if we combine the two for both parties to the couple we have forty-three thousand four hundred and sixty-seven forty-three thousand four hundred and sixty-seven which is essentially the same as they would have had to file jointly the difference between the six and the Seven that's just because of some of the roundoff right over here but they have to pay the functionally equivalent tax rate so just to be clear if you are married you either have to do married filing jointly married filing separate there's also a separate head of household but you do not have the option of filing under an individual so you can't just opt out of the marriage penalty if it happens to exist for the the scenario that that you happen to fall into