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Dh is 65 and on medicare so he no longer uses my insurance. With the marriage penalty patch on taxes scheduled to expire in 2013, I'm wondering if we should consider divorcing for tax purposes. Before Bush put that patch in, we were paying about $4k more in taxes just for being married, but, at the time, we would have paid more than that for dh to cover his own insurance. Now we don't have that issue.
Is it possible to divorce but still keep our finances joint? One of us taking the write off for one child and maxing out a 401K and one taking the other and the write off for the house could reduce our tax burden considerably but our finances need to be joint for retirement purposes (neither of us could retire on half of what we have but we can both retire on what we have).
Wow, I totally forgot there were provisions reducing taxes for married couples (relative to single filers) in the Bush tax laws, and I follow taxes pretty closely too.
Taxes are progressive so when you combine two incomes you pay higher taxes. That is called the marriage penalty to my understanding. I know a lady who was a widower who got back with her old boyfriend (also widower). They wanted to get married but opted not to because of the tax issue.
Check into single filer status though. I should look into this lol.
Wow, the money issue aside, it's so sad that you're considering this. Even if you do better financially by getting divorced, I can't help but wonder about the bigger picture - I mean you took a vow to stay married 'for richer or for poorer'. I've been married for over 26 years and I can't imagine getting divorced for a 'fake' reason. I don't mean to sound all high and mighty; I just think it's a sad thing to contemplate, especially when it's not something you *really* want to do.
You gotta love living in a country with such a ridiculous tax code that people would even think to ask a question like this.
Wake up America!
P.S. It is a valid question, which I don't know the answer to. And I don't think you should feel guilty in any way if you decide to divorce. It's apparent that you will still love your husband, which is the most important thing. The way our country is going, marriage won't mean much in a few years anyway.
In my case, we did the opposite of the OP proposal. Before we were married, we planned to move to South America. I had a fixed income from a pension, so I could easily get a residence permit, but she would be ineligible unless tied by marriage to me as a joint recipient of the income. Otherwise, we probably wouldn't have bothered to get married.
There could be more compelling reasons than just a single small tax penalty, where the cost of getting a divorce might exceed the tax benefit. For example in cases of chronic health issues, one of you might qualify for Medicaid if single, but not if married.
Another factor is widow benefits. The marriage has to be in place for a specified time (I think ten years) for a former spouse to be eligible for the deceased spouse's full SS benefits.
You gotta love living in a country with such a ridiculous tax code that people would even think to ask a question like this.
Wake up America!
P.S. It is a valid question, which I don't know the answer to. And I don't think you should feel guilty in any way if you decide to divorce. It's apparent that you will still love your husband, which is the most important thing. The way our country is going, marriage won't mean much in a few years anyway.
It does seem that a successful married couple is punished through higher taxation. I do understand the reason the OP asked the question. There can be many cases where divorcing for taxation purposes might make sense.
One couple I know, originally the husband made good money but lost his job but did find a lower paying job. the wife started a business and makes very good money. After all the taxes they pay they joke that the husband should just quit since his entire paycheck plus some goes to taxes, you know, the people not paying their fair share. She says she would be ok with him quitting saying it was his steady paycheck that payed the bills when she was getting her business off the ground. She likes the idea, if I were him I sure as hell would quit, what's the point.
Something they are still considering, also considering divorcing but either way will consult with an advisor. Both are about 10 years from retirement anyway. These people worked hard all their lives and they said it's to the point it's not worth all the stress anymore. I don't blame them a bit for even considering it.
Obviously with divorce you lose the benefits of marriage, such as not paying inheritance taxes, pensions, SS benefits, 401Ks, etc that spouses can get, the way property is titled, not having to deal with probate issues... ALso The non spouse is no longer next of kin, for medical purposes. Hs not right to talk with doc, no say on decisions, etc.
You'd have to do a lot of legal paperwork to do to get all that back in place if you're not married.
The way our country is going, marriage won't mean much in a few years anyway.
That's a huge generalization. There are plenty of people in this country that stay married for life. My parents were married for almost 56 years at the time of my mother's death. My husband did photography in the past and took many 50th wedding anniversary photos. My sister and her husband just celebrated their 40th wedding anniversary last month (and are only 58 and 60 years old!). Maybe marriage doesn't mean much to some people but it most definitely means a great deal to many people and always will.
great points, selhars. but the inheritance stuff can be dealt with partially with a good will, if not being abel to avoid probate. get power of attorney for the potential medical problems.
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Wake up America!
