There are many good reasons to get married -- true love and compatibility being among the best. No one would suggest that you tie the knot simply to acquire the tax blessings of the Internal Revenue Service. But the tax code does provide a few wedding gifts to those who say “I do.”
Kevin O’Brien, who formerly taught in the School of Accountancy graduate program at the University of Denver; certified public accountant Libby Fay of Denver; and Valerie Antonioli, a Certified Financial Planner professional and investment adviser for Cherry Hills Investment Advisors LLC of Denver, offered tips for making the extended honeymoon a little sweeter when you prepare your tax return.
"A taxpayer who couldn’t pay into an IRA when single can use the joint income to fund one and potentially put away thousands of dollars for retirement while receiving substantial tax benefits," says Kevin O'Brien.
For years, taxpayers complained about the marriage penalty. This occurred when spouses earned similar salaries, the combination of which pushed the couple into a higher tax bracket than they would have occupied if they were still single. Congress took steps to reduce that penalty, ensuring that the joint tax bill for married couples remains closer to the combined total they would have owed as single taxpayers, Antonioli said. Depending on the incomes, there still can be a marriage penalty. But if the taxpaying spouses have substantially different salaries, the lower one can pull the higher one down into a lower bracket, reducing their overall taxes.
Typically, of course, both spouses would prefer to have good incomes, but if one person has a substantial income and marries someone making little or no money, “that’s golden as far as getting some tax benefits,” said O’Brien, who now is chairman of the Business Ethics and Legal Studies Department at DU’s Daniels College of Business.