Married Couples with Kids Save Big on Federal Taxes
A married couple with two incomes and two young children might have to shell out money for everything from diapers to college savings, but they pay far less than single, childless people in federal income taxes, according to a new study conducted by the Tax Institute of H&R Block. More from CNN Money:
At CNNMoney’s request, the Tax Institute of H&R Block calculated the 2013 federal income tax bill of a dual-earner married couple with two young kids — and compared it to the tax bill of a single person without kids.
We assumed that both the couple and the single person made $100,000 in wage income. (See below for the other assumptions we made.)
And we looked at what their federal income tax burden would be across three cities: Seattle, Topeka and Queens, N.Y.
What we found: The single person paid much higher taxes in all three places — between three and four times more.
In Queens, the single person’s bill came to $11,660 versus $3,076 for the married couple.
In Topeka, the single person paid $13,410, and the married couple paid $4,066.
And in Seattle, the tax bills came to $12,360 versus $3,286.
The yawning gap held up even though each city has different state and local taxes, which influence how much federal tax people pay.
Why the huge disparity: The reason for the big differences is mostly a host of child-related tax breaks the couple can take on their federal return — such as the child tax credit and other breaks for child care and dependents.
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