Reply to How many of you JDs do not work anymore because it is not worth it financially?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]

I don't think so.  She's already in the top income bracket because of DH's income, so[b] all of her income is taxed at the top rate of 35% for federal[/b], plus 8.5% if she lives in DC, plus 7.65 percent payroll taxes, which equals just over 50%.

.[/quote]

No, no, no, no, no! I am consistently amazed at how ignorant people are of MARGINAL TAX RATES. The 35% top bracket only applies to a portion of the family's income. Everyone's first $10,000 is taxed at the same rate. If you are in the 35% bracket, you do NOT pay 35% of your total income in federal income taxes. My family is in the 25% bracket but our effective rate is much lower, maybe 15% once you count all of our deductions, exemptions, and credits.

Here is a quick explanation of how marginal tax rates work: http://www.moolanomy.com/1800/how-do-marginal-tax-rate-and-effective-tax-rate-work/[/quote]

Huh?  Who doesn't understand marginal tax rates?  When OP earns $ she doesn't get to use the lower brackets unless she divorces DH$$$ first.[/quote]

No you are about as dumb as rocks. Let's explain this in your idiot talk so many you will get it. Everyone 'uses' the lower tax bracket for the first part of their income. What you make beyond that gets taxed at the higher rate. So for example everyone's first 50000 or whatever gets. Taxed at a certain rate. Once you make over the max for that rate you get taxed more on the extra amount. Sorry I had to explain this like a third grader but you sound dumb. Oh. And in answer to your rhetorical question: you don't understand the marginal tax rate!!!![/quote]

and you don't understand the marriage penalty.  if your husband makes $150K, then yes, all of your income is taxed at the higher rate.[/quote]

PP again: ALL your income is not taxed at the higher level. In addition, a couple with this type of income disparity would likely see a marriage BONUS not marriage penalty. Only couples that have similar incomes would incur a marriage penalty.

?Couples in which one spouse earns all of the couple’s income never incur a marriage penalty and almost always receive a marriage bonus, because joint filing shifts the higher earner’s income into a lower tax bracket. ?Example of a marriage bonus: A wife earns $200,000 and her husband earns nothing. They have two children and itemize deductions equal to $40,000. Filing jointly, their taxable income is $146,801, on which their 2008 income tax liability is $27,848. But the AMT raises that liability to $30,825. If they could file separately, the husband as single and the wife as head of household with two children, the wife would owe taxes of $38,957 (including the AMT) and the husband would owe nothing. Their joint tax bill is $8,132 less than their combined individual tax bills, giving them a marriage bonus equal to 4.1 percent of their pretax income.
(see example details)
http://www.taxpolicycenter.org/briefing-book/key-elements/family/marriage-penalties.cfm[/quote]

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