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The Tax Implications of Wedding Bells01.07.14

Today's post comes from Tax Pro Jillian Johnson, who you might recognize from some of our TV commercials this year. Jillian is sharing a little more about her clients Kenny and Lorona, whom she introduced to each other-and they ended up getting married!  After they got together, Jillian continued preparing their taxes, but now it was one return instead of two.

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One of the things that I love about my job is the personal interaction with clients. I really get to know them and they start to feel like part of the family. Kenny is one of those clients. He was referred to me in 2010 by another client who explained Kenny was a bachelor who needed help with his taxes and record management.

When we meet we just clicked. We laughed and worked on his taxes and got him organized. He came back year after year.

During the 2013 tax year, when Kenny came again for his scheduled appointment, my office was pretty busy and the line of clients was stretching towards the outside door. One of those clients was Lorona. Even with all the commotion I noticed Kenny noticing Lorona.

When there was a break in the action, I took a moment to introduce them. It was love at first sight! Next thing I knew they were back in the office with wedding rings on. How exciting is that? I was overwhelmed.

An Introduction to Married Filing Jointly 
I love marriage. People are happier when they find true love. Also, married coupled get to file as Married Filing Jointly, the most advantageous way to file! You are taxed at a lower tax bracket with powerhouse deductions.

Married Filing Joint is a reward for taxpayers who combine income. While two heads are always better than one, it's also often more expensive to pay taxes for two. Combining income generally increases taxable income and, as a result, your taxes.  However, the value of your deductions will rise at the same time.  That's why I call them powerhouse deductions. And if children come with the marriage, this opens the door for more credits.

To help offset the increase in taxable income, when you file as Married Filing Jointly the IRS allows the highest standard deduction amount and lowest overall taxes. To encourage taxpayers to file jointly, the IRS also has the lowest possible standard deduction and the highest overall taxes for married taxpayers who file separately.

So how do you qualify? Well, obviously you need to be married. If you were married before 12:01 AM January 1, you are considered married for the full year.  

A New Year for Kenny and Lorona 
I've already been talking to Kenny and Lorona about their tax situation this year and combining their income. Kenny is the CEO of his own painting company and he needs someone like Lorona to help keep him organized.  

Working together, they've had a successful year, and I'm excited to help them close it out. Great minds make great refunds! I'm also excited to see the new things they may purchase for the business if they get a refund.

Isn't love grand?