Methodology & Assumptions
The Marriage Calculator takes information provided by the user about a family's income and assets, the number, sex, age, and parentage of the children, and its decisions to participate (if eligible) in a variety of public assistance programs and computes the net income of the family under four potential living arrangements: (1) the man and woman live apart; (2) the man and woman cohabit (live together but are unmarried) and report the arrangement to all government programs; (3) the man and woman cohabit (live together but are unmarried) and do not report the arrangement to all government programs; and (4) the man and woman are married. The Calculator applies the tax and transfer rules that were in place during 2003, capturing the detailed state-specific variations in rules and the sometimes-complex interactions across programs. The Calculator displays the net income of the family-after taxes and including the value of benefits and subsidies-under each living arrangement and in each state, and can also show the individual components of that net income.
Tax and Transfer Programs Analyzed by the Calculator
Information the User Can Enter About the Family
Assumptions for Characteristics Not Entered by the User
More Assumptions for Calculating Taxes and Transfers
The Computer Program Performing the Calculations
The Tax and Transfer Rules Used in the Calculator
Information Displayed by the Calculator about the Family
Tax and Transfer Programs Analyzed by the Calculator
The tax and public assistance programs analyzed by the Calculator include:- Federal income taxes
- State income taxes
- Payroll taxes (OASDHI taxes)
- Temporary Assistance for Needy Families (TANF)
- Food Stamp Program
- Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
- Public or subsidized housing
- Subsidized child care through the Child Care and Development Fund (CCDF)
- Medicaid and the State Children's Health Insurance Program (SCHIP)
The Calculator also captures the impact of child support income on the financial consequences of marriage. It captures the impact of child care expenses even for families not receiving a CCDF-funded child care subsidy.
Information the User Can Enter About the Family
The user can enter a broad range of information about the family. For both the woman and the man, the user can enter the following information:- Hours worked per week (up to 60 hours per week)
- Hourly wage (up to $20 per hour)
- Value of financial assets (not including a vehicle)
- Value of a vehicle (assuming each adult has no more than one car, and owns it in full)
- The ages and genders of the woman's children (up to 5 children, with no child older than age 17)
- Whether or not the man is the father all the children or none of the children
- The child support income paid on behalf of the children
- The total (pre-subsidy) cost of child care used by the family
- For each assistance program, whether the individuals receive benefits from that program when they are eligible. (Even if a family is eligible for benefits from a transfer program, it may not provide them with benefits for several reasons: (1) for programs that are not entitlements, funds may be exhausted or extremely limited (for example, in many cities there are long waiting lists for subsidized housing); and (2) families may not apply for benefits because they do not want to be dependent on government aid, do not wish to comply with the program rules, feel the benefit received would be relatively small, and may be unaware of the existence of certain programs. Very few low-income families actually participate in all the programs for which they are eligible.)
Under some circumstances, the user is asked to enter additional information to correctly calculate TANF benefits. If TANF is selected and the user indicates that the man or woman has earnings, the Calculator asks the user to give the number of months (up to 23) that the family has combined work and TANF. Also, if TANF is selected and the user indicates that the man is not the father of the children, the Calculator allows the user to decide if the man would choose to be included in the TANF unit in a state that provides such an option to stepparents and/or non-parent cohabiters.
The Calculator assumes that the decision of the man and the woman to live apart, cohabit and report it to government programs, cohabit and not report it to government programs, or marry does not cause any change in the characteristics entered by the user. In particular, across all three scenarios, the Calculator assumes that:- Hours worked and wages earned remain the same.
- The family's need for paid child and the total (pre-subsidy) cost of that child care are unchanged.
- The family's participation in a particular program (if eligible) is unchanged. For example, if the user indicates that the family receives (or wants to receive) CCDF-funded subsidies, the family receives that subsidy in any scenario in which they are eligible. Note, however, that their eligibility may change.
The one item entered by the user that may change across living arrangements is child support. If the man is the father of the children, the Calculator captures the fact that he only pays child support when he is living apart from the woman and children.
Assumptions for Characteristics Not Entered by the User
The Calculator makes numerous assumptions about characteristics that cannot currently be entered by the user.
Assumptions about living arrangement, location, and rent:- If the woman is not cohabiting with, or married to the man, she and her children live alone.
- If the man is not cohabiting with, or married to the woman, he lives alone.
- Both the man and the woman live in the same state.
- Both the man and the woman are renters, not homeowners.
- The total (unsubsidized) value of a family's rent equals the lesser of the Fair Market Rent (FMR) for the required number of bedrooms, or 75 percent of the family's income. (The Calculator estimates the required number of bedrooms based on family composition.)
- The family lives in the largest county in the state. (Some TANF and CCDF rules vary across counties, and FMRs vary by county.)
- The woman and man are both between the ages of 25 and 50. (Being at least 25 entitles an individual to the EITC even if he or she is living alone.)
- The woman is not pregnant.
- Neither the woman nor the man is disabled, a member of the Armed Forces, or an immigrant.
- If the man is not employed, he is looking for work.
- The woman and the man, if working, are not self-employed and are covered by FICA taxes.
- The woman and the man are fully compliant with all program requirements for all programs in which they participate.
- If the woman and man are cohabiting and reporting it for government programs, they report the cohabitation to all programs. Alternatively, if the woman and the man are not reporting the cohabitation, they do not report it for any of the tax or transfer programs. Therefore, the net income in the tables for families when they live apart and when they cohabit and do not report the arrangement to the government are identical.
- Neither the woman nor the man has any income other than the earnings or child support entered by the user. (The Calculator assumes that any financial assets are in non-interest-bearing accounts.)
- None of the children are disabled
- Children have no income or assets independent of their parents
- All children live with the mother.
- The woman has no children living elsewhere.
- If the man is the father of the woman's children, those are his only children; if the man is not the father of the woman's children, he has no children.
More Assumptions for Calculating Taxes and Transfers
Additional assumptions are required for the calculation of federal and state income taxes, TANF, Food Stamps, WIC, public or subsidized housing, CCDF-funded child care subsidies, and SCHIP.
Federal and state income taxes:- All individuals take all tax credits and deductions to which they are entitled.
- When the woman is unmarried, the children are always considered the dependents of the woman. The children are never considered the dependents of the unmarried man, even if he is their father, and even if the user has specified that his earnings exceed those of the woman. [See endnotes]
- When the man and woman cohabit, neither claims the other as a dependent for tax purposes.
- All tax units take the standard deduction. (In other words, the Calculator assumes that no tax units have sufficient deductions to itemize.)
- Neither the man nor the woman contributes to an Individual Retirement Account (IRA).
- Local (county and/or city) taxes are not modeled in the calculator or displayed in the policy database.
- The family is considered a recipient (not an applicant) for determining the current month's eligibility and benefits.
- The family has not received TANF long enough to be affected by any state or federal time limit. [See endnotes]
- None of the children in the family was conceived after the family began receiving TANF, so no children are subject to a "family cap" in any state. [See endnotes]
- In Wisconsin, if the adults are not working, they are considered "not job ready" and placed in the W-2 program, which provides a cash benefit. If the adults are working, they are considered job ready for unsubsidized employment and placed in the Unsubsidized Employment program, which does not provide a cash benefit. If an unemployed woman marries an employed man, she is in W-2 when the man is not part of the TANF unit but in Unsubsidized Employment when the man joins the unit.
- If the noncustodial parent pays child support greater than the maximum TANF benefit in the state (by family size), the Calculator assumes that the family would not participate in TANF (even if the user has indicated that the family would choose to receive TANF).
- When the man is living alone or cohabiting with a woman but not reporting it to the government, he is potentially eligible for food stamps only if he is working at least 20 hours per week (or earning the equivalent of someone working 30 hours per week at the minimum wage). Otherwise, the Calculator assumes that he has already received the 3 months of benefits allowed an "ABAWD" (able-bodied adult without dependents), and that he is not exempt from the ABAWD rules.
- When the man is living with the woman and children and they report his presence to the government programs, he is assumed to purchase and prepare meals with the woman and children, and to apply for food stamps as part of the same unit as the woman and children. (Note that when he is living with the woman and children, he is not considered an ABAWD, regardless of his work status.)
- All women, infants, and children who are eligible for WIC based on their income or program participation are assumed to be at nutritional risk.
- All mothers of infants are partially breastfeeding their infants. Therefore, the mother is potentially eligible for WIC throughout the baby's first year, while the infant's WIC benefit still includes formula.
- As a non-disabled, non-elderly adult, the man is assumed to never receive public or subsidized housing when he is living alone.
- There is nothing in the man's background that would preclude him from being added into the household for purposes of public or subsidized housing (in the case when the woman and children are already in public/subsidized housing and the man moves in).
- The family is considered a recipient (not an applicant) for determining the current month's CCDF eligibility and copayment.
- If a family receives a CCDF subsidy but the total cost of the child care exceeds the state's maximum reimbursement rate, the family pays the excess, in addition to paying any required copayment.
- In the absence of 50-state data on the actual treatment of non-parent cohabiters and stepparents, the Calculator makes the following assumptions: A non-parent cohabiter is never considered for determining CCDF eligibility and copayments, and a stepparent is treated the same as a biological parent.
- If the user indicates that the family would participate in Medicaid or SCHIP, it is assumed that no children are covered by employer-sponsored insurance. (Being covered by employer-sponsored insurance would make them ineligible for SCHIP).
The Computer Program Performing the Calculations
The computer program performing the calculations is the Transfer Income Model, version 3, or TRIM3. TRIM3 has been developed and maintained at The Urban Institute for over 30 years, with primary funding from the Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. TRIM3 is a comprehensive microsimulation model of the tax, transfer, and health programs affecting U.S. households. The model is primarily applied to large survey databases (most often, the Current Population Survey).
Using the information about the man, woman, and children entered by the user, the Marriage Calculator creates a small database with information about four households:- The woman and her children
- The man, living alone
- The woman, children, and man in the same household, with the woman and man unmarried (cohabiting)
- The woman, children, and man in the same household, with the woman and man married
TRIM3 simulates the tax programs and the selected transfer programs for the four households and returns the results to the Marriage Calculator interface for display to the user. For more information on TRIM3, including the steps in the calculations for each tax and transfer program, see that project's website: trim3.urban.org.
The Tax and Transfer Rules Used in the Calculator
For all programs except Medicaid and SCHIP, the Calculator uses the rules that were in place as of 2003. For Medicaid and SCHIP, 2002 is the most recent year for which rules are currently available across all states at the level of detail required by the Calculator. In cases when a program's rules changed during the calendar year, the rules that are used are generally those that were in place for the majority of the year. However, in some cases, information is available for only one point during the year.
The Calculator uses rules obtained from the following sources:- Federal income tax liability: Federal 1040 form and instruction booklet for tax year 2003[See endnotes]
- State income tax liability: State tax forms and instruction booklets for tax year 2003[See endnotes]
- TANF: The majority of the rules were obtained from the 2003 data in the Urban Institute's Welfare Rules Database (WRD), funded by HHS/ACF. When rules vary across area of the state, the rules for the most populous area are used. For more information, see the WRD's website anfdata.urban.org/wrd. Some TANF cohabitation rules were obtained from "Findings from Survey of State TANF Policies Regarding Cohabitation and Marriage, 2002-2004. Survey Completed by Robert Moffitt, Robert Reville, and Anne Winkler, December 2004."
- Medicaid/SCHIP: Multiple sources of information on Medicaid and SCHIP rules for 2002.
- Food Stamps: Federally-established rules are the rules as of July 2003, from the FNS website and other federal sources. Rules for treatment of vehicles and for the treatment of child support paid by a Food Stamp recipient are taken from the Food Stamp Program State Options Report, third edition, with rules as of October 2003.
- WIC: Eligibility rules are from the FNS website and regulations. The value of WIC benefits is the average value per person-month by type of recipient-women, infants, and children-using the same values for all states.
- Public and subsidized housing: Eligibility and copayment rules are from federal regulations. Fair market rents (used to estimate the value of the subsidy) are the 2003 FMRs for the largest county in each state, from the HUD website.
- CCDF-funded child care subsidies: Eligibility and copayment rules are from the October 2003 CCDF State Plans. When rules vary across regions of the state, the rules for the most populous area are used.
Rules that are directly tied to marriage policy are included in the Database of State Policies Affecting Marriage, one of the tools available on this website.
For an overview of key rules of the tax and transfer programs, click here.
For an overview of key interactions across transfer programs, click here. When the user makes a change in the characteristics of the family, these interactions can result in a range of secondary impacts, in addition to the direct impact of the change.
Information Displayed by the Calculator about the Family
The Calculator can display the monthly net income-after taxes and including the value of transfers and subsidies-for each living arrangement and for each state and the District of Columbia. The Calculator can also show the detailed components making up the net income for each state and living arrangement.
The components are:- Earnings
- Federal income taxes, prior to the EITC:
One-twelfth of the annual amount; shown as a negative when the family owes taxes, shown as a positive amount if a refundable credit exceeds tax liability - Federal EITC:
One-twelfth of the annual amount; shown as a positive amount - Payroll taxes:
The employee's portion of payroll taxes for Old Age, Survivors and Disability Insurance and Health Insurance-in other words, Social Security and Medicare taxes; shown as a negative amount - State income taxes:
One-twelfth of the annual amount; shown as a negative when the family owes taxes, shown as a positive amount when refundable credits exceed tax liability - TANF benefit:
Monthly amount received by the family; $0 if the family is ineligible or is eligible but not participating - Food Stamp benefit:
Monthly value of food stamps; $0 if ineligible or if eligible but not participating - Monetary value of WIC benefit:
Total monthly value of WIC benefits across all people in the family receiving the benefit; $0 if ineligible or if eligible but not participating - Housing subsidy:
For subsidized households, the fair market rent of the apartment minus the copayment; $0 if the copayment would exceed the FMR, or if the family does not receive the benefit - Child care subsidy:
For subsidized families, the total monthly value of child care used by the family (as entered by the user) minus the copayment, with the exception that if the total value exceeds the state's maximum rates, the family pays the difference; $0 if ineligible or if eligible but not participating. - Child support income:
Monthly amount of child support paid (shown as a negative amount) or received (shown as a positive amount).
Users should be aware that the Calculator's net income concept does not include subtractions for housing expenses or child care expenses. Thus, the comparisons currently displayed do not capture the fact that when a man moves in with the woman and children, he will no longer have to pay rent on his own apartment. Also, the child care subsidy row will be $0 for both families not using paid child care and families who are paying for child care out-of-pocket but not receiving CCDF-funded subsidies.
Due to the complexity of valuing public health insurance benefits, enrollment in Medicaid or SCHIP does not affect the income amounts. However, when showing the details for a state, the Calculator shows the number of family members enrolled in Medicaid or SCHIP under each scenario.
Endnotes:
1. More information about dependency assumption:
This assumption does not fully capture reality. According to actual tax law, if two unmarried parents cohabit, the parent who claims the children as dependents depends on the level of support provided by each parent. A non-parent cohabiter who cared for a child "as his own" and had the higher income would be entitled to claim the child for EITC purposes. A noncustodial parent might also claim the children.
In cases when the man is the father of the children, the Calculator may mis-state the tax liability of the man and the woman in the case when they are cohabiting, if the father would in reality have claimed the children as his dependents. In cases when the man is not the father of the children, the situation is less clear, because the economic circumstances of a noncustodial parent (who might also claim the children in the) are unknown.
2. More information about time limit and family cap assumption:
If user indicates that the family has combined work and TANF for a relatively long period, there is a small potential for inconsistency between the data entered by the user and the assumptions that no children are subject to a family cap and no units are affected by a time limit. Concerning family caps, if the user indicates that the family has combined work and TANF for close to 2 years and the family includes an infant, that infant must have been born more than 10 months after the TANF case opened. In most states with a family cap policy, that infant would be affected by a family cap.
Concerning time limits, a small number of states permanently or temporarily stop or reduce TANF benefits after a period shorter than 2 years. Specifically, Connecticut imposes a lifetime limit of 21 months (unless recipients receive an extension), Tennessee stops benefits for 3 months after a period of 18 months, and Texas excludes the adults considered the most work-ready from the TANF unit for 5 years after 12 months of TANF receipt. The Calculator does not currently capture these rules; even if the user indicates that the family has combined TANF and earnings for 23 months, the Calculator's results for these three states will not reflect the state time limits.
3. More information on federal and state income tax computation.
The Calculator generally computes federal and state income tax liabilities and tax credits using mathematical formulas, rather than using the "tax tables" used by most taxpayers. Although the tax tables are based on the formulas, in some cases the results produced by the formulas may differ from the value shown in a table by a very small amount.