Marriage + Stock

Forum|Forum|2 years ago
October 25, 2023
2 replies
49 views

Hi I have two different questions.

1. The first, is what are the potential implications of getting married legally this year vs next year. Is there any reason to wait and hold off on getting married? My fiance is in a higher tax bracket than I am but we are both relatively high earners.

2. I previously held a lot of stock in a company that went bankrupt and the stock is now worth nothing. How should I be maximizing tax benefits for this loss?

Ask the Experts - Extension - Sept 2023

Andrew_W

Level 6

Hi @Ajogni15,

The implications for getting married this year versus next year are the same, from a tax perspective. There's no particular benefit to waiting in general. Depending on your income levels, getting married may lead to an overall lower income tax rate, and thus a lower tax paid overall.

These articles have more detail on the potential benefits of marriage from a tax perspective:

7 Tax Advantages of Getting Married

What does getting married mean for my taxes?

Regarding the investment losses you have, assuming they are not held within a retirement account, you may be able to do tax-loss harvesting if you were planning to sell other investments (or already have sold other investments this year) for a gain. This article details tax-loss harvesting and when it may be beneficial to consider: 5 Situations to Consider Tax-Loss Harvesting. If that option is not applicable to you, losses are limited to 3,000 each year, with the remainder carrying over to future years.

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tulipan

Level 5

Hi Agjoni15! Thanks for your great questions!

First, getting married will allow you to file your taxes using the Married Filing Jointly status, which includes higher tax breaks than available to someone filing Single. The IRS considers you to be married for the entire year, even if you get married on the last day of the year. So, if you get married by the last day of 2023, you'll be able to take advantage of the Married Filing Jointly filing status for your 2023 taxes. Take a look at the article, "What does getting married mean for my taxes?" for additional information.

Next, you asked about the benefits of holding worthless stock. In essence, you would report this as any other stock transaction (as a capital loss), reflecting whether you held it more than one year (long term) or a year or less (short term) and identifying the sales proceeds amount as zero, thus giving you a loss in the amount of your cost basis.

You can deduct the worthless stock only in the year it became completely worthless, which is normally when the company files for bankruptcy, stops doing business, and has no assets. (If it became worthless in a prior year, you can file an amended tax return for up to three years to claim the loss and a refund.) When entering the "sale", you should include the word "worthless" in the description of the security. Here is a link with instructions on how to enter the worthless "sale."

I hope this helps!