Marriage & Taxes: The Good News and The Bad News

If you are getting married this year, you might want to know that even if you marry on December 31st this year, the IRS will consider you married for the entire 2012. Along with music, dresses, food, laughs and love, you will also enjoy many tax benefits after you are married. That is if you choose to file taxes jointly. Apart from of course lower tax rates that all married couples who file jointly enjoy, some other tax benefits both you and your spouse will have are:

The Good

Freedom towards contributing to the IRA

If either you or your spouse has taxable compensation, either of you can make a contribution to an IRA. This benefit is not enjoyed by individual taxpayers who do not have taxable compensation. The working spouse can make a spousal IRA contribution for the non-working spouse.

Retirement account benefits

Retirement is the last thing you think about when getting married, but tax laws dictate that both you and your spouse can benefit from a retirement account even if either one of you is not the account owner. You can make your spouse a beneficiary to your retirement account.

The Bad
Withdrawing from retirement plan

It is not something anybody expects from a spouse, but many times a spouse may withdraw large amounts of retirement assets without the knowledge of their spouse. That can hurt the retirement years of the couple. Luckily, in most cases a spouse can cash out without the other’s consent only if the accrued balance is $5,000 or less.

Innocent Spouse

If a married couple has been filing taxes jointly and a spouse incurs a tax liability without the knowledge or fault of the other, the innocent spouse may be cleared of any responsibility towards paying the tax liability. Taxpayers who file for innocent spouse relief whether they are married, separated or divorced, may use the services of a tax expert to qualify for this IRS relief program.

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