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What is the tax marriage penalty and when does it apply? Under what circumstances would a...

What is the tax marriage penalty and when does it apply? Under what circumstances would a couple experience a tax marriage benefit?

Describe the order in which different types of tax credits are applied to reduce a taxpayer’s tax liability.

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The tax marriage penalty is the case where two people having separate incomes marry and thus pay higher taxes as a couple with more income. Filing tax returns as single is considerably low than of the people who marry and earn equal income. A tax benefit is experienced by a couple when the individuals that marry have disparate incomes.

The types of tax credits that are applied to reduce a taxpayer's tax liability are non-refundable tax credits, refundable tax credit and partially refundable tax credit. The nonrefundable tax credits are deducted from the tax liability until it becomes zero. The tax credit that is not utilized is not refundable. This tax credit is suitable for low-income individuals. refundable tax credits are ones that are fully refundable. Even if the tax liability becomes zero this tax credit is refunded. The partial tax credit is where the tax credit is partially refundable. This helps in decreasing tax liability and taxable income.

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