Tax Bracket and Marriage vs Staying Single
  • Rawrchu
    Posts: 516Member
    First off, I'm not sure what category to put this under so general chat it is for now! ;)

    I haven't been married in FOREVER. BF & I are moving in together with the intent of getting married.  However, how can we determine if marriage is a financially sound move or if it would benefit us to stay single?  I'd really like to get married (I NEVER thought I'd say that again!), but one of the big factors is that DD is currently in college and on my single mom income, she qualifies for a lot of financial aide.  Being married, our income will at least double and I'm pretty sure that she will no longer qualify for the income based grants & scholarships. This year I didn't qualify for EIC (Earned Income Credit) or any of the other child credits, so maybe it's not really beneficial. I have absolutely no idea. Any advice?  
  • LoveLove
    Posts: 14,066Administrator, Moderator
    Can you (or she) afford the rest of her tuition without financial aid?
    (That's more than enough reason to put off nuptials for some people!)

    My girlfriend and her bf just had a baby, and I asked her when they were going to get married and make it official (joking) and she very seriously told me, after she finishes her degree, because his income+hers puts her out of range for financial aid. (So you are not alone one that one. Not at all!)

    As far as income taxes go, if you are already out of range for EIC and CTC, getting married shouldn't have much of an effect on that, unless it pushes you two into a higher tax bracket, but that's a whooole lot of gap, so I doubt you need to worry about that.

    When Dh and I got married, we lost about 10 grand a year in tax refunds, bc we were both HoH with 2 children each. After we got married, we lost our EIC completely.

    community-manager


  • LoveLove
    Posts: 14,066Administrator, Moderator
    See if this helps you at all. I don't want to ask what numbers we're talking about as far as your income, but this chart is pretty easy to read:

    community-manager


  • stinkersmommystinkersmommy
    Posts: 1,887Member
    Easy answer file as married but filing seperately since you are responsible for your dd and can technically still claim her since she is still a student esp if she doesn't work or make more than 15k a yr
  • Rawrchu
    Posts: 516Member
    Interesting.  Thanks for the chart @Love.  So based on that, we'd be paying about $5000 a year more in taxes because my income would move into the next tax bracket where his already is.  However, that doesn't account for adjust gross income or deductibles or any of that, but still gives me a pretty good idea.  I was shocked when I didn't qualify for EIC this past year. I always have and my income was less than the previous year (thank you so much pay cuts!). 

    As for married filing separately, it doesn't matter. If I'm married, I have to count his income as well. Can we afford to pay college without the assistance?  Nope, not even close. We have 6 kids between us and it looks like the next in line will be entering college this fall! As is, she's having to get financial aide to pay for anything not covered by grants and scholarships. College is ridiculously expensive!!! 

    It's sad that marriage can sometimes be a financial decision. 
  • Rawrchu
    Posts: 516Member
    I found this link:  http://www.bankrate.com/calculators/tax-planning/1040-form-tax-calculator.aspx  Wayyyyy interesting.  Our taxes seem like they would actually be about the same as what we are already paying, but as far as my daughter it would make a HUGE difference. My taxable income is almost half of my actual income right now, so only a quarter of our combined income. 

    Anyway, thanks for the tips.  More advice is always welcome! :)
  • AutumnAutumn
    Posts: 898Member
    Rawrchu said:

     
    It's sad that marriage can sometimes be a financial decision. 



    I totally understand this @Rawrchu! DF and I have been engaged for 2 years and want to get married so bad! But then we wouldn't qualify for financial aid for college, and neither of us have a degree so college is a must.  :(
  • BellaBefanaBellaBefana
    Posts: 10,374Member
    Yeah, it pretty much sucks that combining incomes screws people in the scholarship/tuition assistance realms.  

    If I were you, I'd take both of your tax returns to H&R Block or someone and see, if it doesn't make financial sense to get married and you're o.k. with living together...I say screw the license...
    Bite me, cupcake!
  • Jjva
    Posts: 47Member
    Yeah, getting married totally screwed us from a tax perspective. Married filing jointly was our best bet, but either married status was way worse than single.
  • momofeveryonemomofeveryone
    Posts: 1,917Member
    DH and i will be divorcing on paper when DS turns 15 bc of college. if he chooses to do something else DD will be 2 years behind him anyway. it will only be in paper and nothing will change in our relationship other then our taxes and FAFSA. it sucks but you gotta do what you gotta do. id this last one going this fall your last kid? if so, hold off on the legal things, and have a commitment cerimmony. no one needs to know you dont sign the papers.
    i want a nap. and some chocolate. who's with me?!
  • Rawrchu
    Posts: 516Member
    @momofeveryone - Nope, not the last, but she's the one I'm most concerned about because she's got quite the head on her shoulders and is set to be a veterinarian which is about 8 years of school. I don't want to screw that up for her, but I don't want to wait to get married until she's done, either.  We'll see, I suppose. Hopefully the scholarships will start flowing. His kids' FASA will be based on their mother, so that's not really as much of an issue & my DS still has several years...so it's really about DD. 
  • CSmith
    Posts: 40Member
    It is sad when marriage is a financial decision. My daughter was born with some problems and had to have four surgeries before she was 10 months old. The bills were so expensive that someone in the financial office at the Children's Hospital "mentioned" to me that if we were divorced my baby would qualify for almost free medical care. We didn't get a divorce of course, but I found that if I applied as being seperated(which technically we were, since I spent almost all of my time at the hospital or Ronald McDonald house) then my husband's insurance paid it's share and the state paid most of the rest. I felt sneaky and dishonest but we still ended up paying almost ten thousand dollars and otherwise we would have owed around 80. We would have lost our house for sure.