Tax Benefits As A Single Person

For many years now it has not been unusual for two people to be in a committed relationship with one another, and even live together, without being married. There are many reasons why this is the case, but in some ways, the U.S. federal tax code has not necessarily kept up with the times in terms of equating marriage with cohabitation. There are additional complications that may result from cohabitation without marrying. Primary among them is the legal right to make life-altering medical decisions on a partner’s behalf if they are incapable of doing this for themselves. Unless each partner gives the other power of attorney to make medical decisions, they may even be banned from their loved one’s hospital room.

Considering the above downsides to cohabitation versus marriage, one may be happy to hear that there are tax benefits to be gained by living together instead of marrying. It’s important to note that when considering tax obligations and tax breaks, one should consider discussing details with a tax professional or a family law attorney. Below is a general overview of how tax codes may affect those who cohabitate with their partners.

Tax Codes and Unmarried Couples
The federal tax code includes what many refer to as the “marriage penalty,” and it increasingly comes into play as the couple earns more income. If they file their tax returns jointly, their combined assets will be taxed at a higher percentage than if they were to file individually, which makes them vulnerable to paying more taxes.

The minimum tax exemption is an alternative that also is more favorable to those who file their taxes individually. This is because their reported individual income will be less than the combined income of the couple. In this way, married couples who file their taxes jointly tend to pay more in taxes. When married couples jointly file state and federal taxes, they often qualify for less deductions than when unmarried persons file individually.

Where can I find legal guidance about how marriage might affect me from a legal standpoint?
Getting married is a momentous event in one’s life and with it comes changes in many areas, including legal rights and tax obligations. A knowledgeable family law attorney can explain how marriage might change your legal rights, opportunities, and responsibilities. Because tax laws and marriage and cohabitation laws change, it’s important to consult with a legal professional who keeps up with changes and pending legislation. A good family law attorney can help you make informed and proactive decisions about how to protect your best interests. Contact an attorney today to learn more.