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Tax memo:

Background: Sadiq is 25 years old and is currently unmarried and has no children. He does have a girlfriend, Nalo, and is thinking about marrying her on December 20, 2023 but has heard about the marriage tax penalty and would like to better understand this issue and how it will impact them. He currently lives in Nevada and knows you through your friend, Frankie, as Frankie has recently moved to Nevada. In order to make the assessment you will need to understand the personal tax situation for both of them in 2023 and this is the current situation. Sadiq works for a licensed BMW dealership and he estimates this year he will make $39,500. He rents his room from Nalo. It is how they met. In April 2023 he inherited $37,000 from an uncle and he has been able to score a great deal from his employer and purchased a 2020 BMW X3 xDrive30e for $25,000 on May 1, 2023. Up until then he had been getting rides to his job from his girlfriend, or borrowing her car, who drives a 2022 Jaguar F Type. His employer does not provide a 401(k) plan or any type of savings plan but he knows he should start putting into a retirement account and he put $6,500 into a Traditional IRA account on May 10, 2023. Nalo is a doctor and makes $175,000 a year and she has no children. Her husband died in 2019. Her employer provides a 401(k) plan. She rents her place. Her living expenses and her student debt means she has no investment income. You research should consider the following (but it is not an exhaustive list): IRC 25B IRC 25E IRC 408, 408A IRC 1 IRC 63 Ensure you are using the 2023 amounts for standard deductions and income tax rates: IRS provides tax inflation adjustments for tax year 2023 | Internal Revenue Service Your responsibility: Prepare a tax research memo addressing the issues that analyze the tax result for Sadiq if he files Single in 2023 or marries his girlfriend in 2023.

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