Despite tax overhaul, marriage penalty still hits many couples

Two can live as cheaply as one, the old saying goes. Except for some high-income taxpayers. Although the Tax Cuts and Jobs Act mostly eliminated the so-called — and hated — marriage penalty,

some taxpayers, particularly high-income couples, could still end up paying more in taxes as a married pair than they would if they were each single. The penalty typically kicks in when two

individuals with equal incomes marry, bumping them into a higher tax bracket than they would be otherwise, said Mike Savage, a certified public accountant and CEO of 1-800Accountant.

"The Tax Cuts and Jobs Act attempted to eliminate the marriage penalty but it only pushed it out farther," Savage said. Under the new rules, which took effect last year, the

marriage penalty kicks in for married couples with combined income of about $600,000 or more. At that point, married couples hit the top 37% federal income tax bracket. In contrast, a single

filer reaches the 37% bracket at around $500,000, meaning an unmarried couple could enjoy income of $1 million before reaching the top bracket. Unsure what tax bracket you are in?

Here's where you stand in 2019 There are other tax implications for married couples, as well, including a Medicare surtax of 0.9% and a net investment income tax of 3.8%. For example,

an individual can have up to $200,000 in income before the Medicare surtax kicks in, but the limit for married couples is only $250,000. Similarly, the net investment income tax also starts

at $200,000 for single taxpayers, and $250,000 for married couples who file jointly. In addition, long-term capital gains rates are 15% for single individuals up to $434,550 of taxable

income and then rise to 20%. But for married couples, the 15% rate goes up to $488,850 of taxable income and jumps to 20% from there. In every case, the penalty is not a specific tax, but

rather the result of reaching a certain threshold sooner as a couple filing their taxes jointly. As the percentage of women in the workforce increases, along with their earnings in relation

to men, more couples experience that tax hit. MORE FROM PERSONAL FINANCE: The IRS will waive this tax penalty for more than 400,000 filers Here's why Jeffrey Epstein likely paid little

in the way of taxes These people don't mind overpaying the IRS No matter when you get married during the year, come April, you'll need to file your 2019 tax return as a married

couple. On the flipside, if you get divorced at any time, you'll file as single in the spring. "Your marital status for tax purposes is whatever your status is on Dec. 31 of each

year," said Robert Rehm, a vice president of tax services at Mariner Wealth Advisors. "If you get divorced on the last day of the year, for tax purposes, you are treated as being

unmarried for the entire year." However, splitting up to avoid the penalties rarely makes sense, since there are other tax advantages that come with filing jointly. "If you were

going to get unmarried, you are throwing away other benefits" said Dave Stolz, a CPA and member of the American Institute of CPAs' personal financial specialist committee. These

include spousal individual retirement accounts, which let couples double up on retirement savings even if only one spouse works, and tax exemptions on estate transfers, also known as the

"unlimited marital deduction." "It's a step over a dollar to pick up a dime kind of thing," Stolz said. _SUBSCRIBE TO CNBC ON YOUTUBE._