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Thread: Melonie? Cohabitating vs marriage

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    Veteran Member Fionaver's Avatar
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    Default Melonie? Cohabitating vs marriage

    Cohabitating/domestic partnership vs marriage - back taxes/ medical bills on his end -700 credit on mine vs marriage. Pros/cons?

    We're looking at power-of-attorney/medical-power-of-attorney, which may sound stupid, but I have no real assets anymore. And we both have the same, leave-'em-better-than-you-found-'em mentality.

    i would like to get a better perspective from you as far as when it would make financial sense to get married or what to do if we have kids or whatever.

    (He doesn't really believe in the LTC of marriage either - after how my parent went, I don't think that differently...)

    Thank you.

    PS I am not the one pushing to get things resolved. We live together and I don't work anymore. And probably can't work again, given joint pain/burn out. He's the guy that I want for as long as our love lasts, we just went through a pregnancy scare, talked a lot about where we want to be and are working toward it. Dumping him is not an option.

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    Banned Melonie's Avatar
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    Default Re: Melonie? Cohabitating vs marriage

    Tons of unique variables will apply, but in general ...

    - if you are currently not earning money on your own, being able to file taxes as 'married filing jointly' will probably result in a significant tax savings

    - absent a pre-nup, his back taxes / unpaid medical bills become YOUR back taxes / unpaid medical bills as soon as the marriage license is filed. Pre-nup or not, his credit rating also becomes your credit rating as soon as the marriage license is filed.

    - if kids are anywhere on the horizon, marriage is a financial 'crap shoot' depending on your future level of combined income. If that combined income level is 'low', it's most likely a winner thanks to tax credits, means tested social welfare benefits etc. If the combined income level is 'high', it could be a loser.

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    Default Re: Melonie? Cohabitating vs marriage

    BF and I have been living together for 9 years. Still no ring and no date, by choice. From a tax standpoint, we save about $6,500 on our federal taxes and $400 on our state taxes by being single. That's not the reason we aren't married. Neither one of us is ready for that commitment.

    HTH
    Z

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    Banned Melonie's Avatar
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    Default Re: Melonie? Cohabitating vs marriage

    ^^^ I'll underline Zofia's point about marriage and tax bills. Marriage works out to save on taxes if one partner has a high income and the other has a low / no income. Marriage works out to cost a bit more in taxes if both partners have income levels which are more or less equal, but still in the 'average' range. Marriage works out to cost a LOT more in taxes if the combined income of both partners starts to approach the new definition of 'rich' i.e. $250k per year.

    With the onset of the Affordable Care Act and certain other programs, marriage can now also affect eligibility for 'free' benefits and/or subsidies. For example, two single people could each earn $45k per year and still receive say 2 * $ 150 per month discounted ACA insurance. But if married, eligibility for subsidies would end at ~$60k per year of combined income, potentially raising monthly ACA insurance premiums to $500 per month ... a $2,400 annual increase in premium cost. But on the flip side, being unmarried, with one person's income being below ~$15k per year thus making them eligible for 'free' Medicaid insurance coverage, also exposes that person to the risk that the gov't will attempt to seize future assets ( like a family home ) in that person's name as eventual repayment for those supposedly 'free' Medicaid benefits.

    As I mentioned in my initial response, there will be a ton of variables involved for every specific couple's situation.

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    Veteran Member Fionaver's Avatar
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    Default Re: Melonie? Cohabitating vs marriage

    Apparently, I deleted my response inadvertently.

    Do you know anything about settling with the IRS for back taxes and medical bill settlement? I barely worked last year <10k and he's going to pay off my taxes, but we're looking at 6-8 months of nothing $$$-wise from last year. Would that make a difference?

    Also, I still may be pregnant. :/

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    Veteran Member Fionaver's Avatar
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    Default Re: Melonie? Cohabitating vs marriage

    And THANK YOU Melonie. Anymore advice that you can give more specifically would be appreciated. We need to get this resolved.

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    Banned Melonie's Avatar
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    Default Re: Melonie? Cohabitating vs marriage

    Do you know anything about settling with the IRS for back taxes and medical bill settlement? I barely worked last year <10k and he's going to pay off my taxes, but we're looking at 6-8 months of nothing $$$-wise from last year. Would that make a difference?

    Also, I still may be pregnant.
    Ok that provides more info for conjecture. If you personally have very low income, and if there is a chance that a child will enter the 'picture', getting married could potentially sacrifice your present eligibility for Medicaid, WIC, SNAP etc. which you and your child may need. If there are large outstanding medical bills, getting married would also vastly complicate any potential bankruptcy filing ( as well as ruining BFs credit right along with your credit for the next several years ).

    so, for better or worse, the key unknown really boils down to how much money BF is likely to earn on his own. If his income is in the $60-80-100k ballpark, and if BF's employer offers benefits for 'dependents', then the 'cost' of BF cleaning up your back taxes and medical bills will be small ( in relative terms ), future out-of-pocket medical costs will be minimal, while the tax savings available via 'married filing jointly' will be significant.

    But if BF's income is in the $30-40k ballpark, and if BF's employer does not offer benefits for 'dependents', getting married and putting eligibility for Medicaid, WIC, SNAP etc. at risk ... as well as risking eligibility for a Chapter 7 bankruptcy filing to erase your outstanding medical bills ... would probably be a 'losing' proposition.
    Last edited by Melonie; 04-01-2015 at 06:37 AM.

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    Featured Member Aurora14's Avatar
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    Default Re: Melonie? Cohabitating vs marriage

    I know you had this directed at Melonie, but I thought I may bee able to add useful info. My husband and I were together 6 years before getting married. Lived together for 2. We were perfectly happy not being married too. Then a shit storm of medical events happened.

    With my daughter and I living alone we qualified for some state benefits. State benefit level vary by state, co you will have to look into them if that is something you need to consider. My income and child support were high enough (luckily) that all we qualified for was MedicAid (insurance). Once I got pregnant again the BF moved in and I had to start reporting his full income. While I was pregnant the kids and I qualified for the state medical. Then the kids were primarily covered by their dad's insurance with state as a secondary.

    Last year a bunch of the ACA mandates kicked in. Because I'm one of those honest people reporting income for everyone in the house over 18, the kids could stay on state medical for $50 a month and I got kicked off. I never received any notice of this change. I just got a bill for the kids one day and my Dr. called to tell me my insurance had been denied for my next appointment. Since my kids are relatively healthy, we opted out of MedicAid and I looked into insurance because I do have issues. The lowest plan was going to be like $300 a month and was shitty. So I got married to get on my now husband's AWESOME insurance. It only cost him like an extra $40 a month to add me and EVERYTHING I need is covered.

    When it comes to taxes, it's rough. When it was just my daughter, I claimed her because I made less. We got more that way. Then when we had 2 kids, we each claimed 1. Even with his higher income we made more than having me claim both. This year, we are making crap. Now that our incomes are being reported combined we don't really get a refund. (First world problems, I know)

    As for medical stuff, I believe you can got to a lawyer and have papers drawn up making each other power of attorney. If you actually have the papers drawn up, you can even include certain stipulations. Like if you don't want to be on life support or stuff like that. Regardless, having the paperwork is useful if you or married or not.

    I had credit card debt. When I got married collectors came out of the wood work and found me to try and collect. When it comes to CC or medical debt, they could care less how much or little you make. They don't care about your hardships. They just want their money. You can call the company handling the debt and hope you get someone nice that will set up low monthly payments so you can avoid getting sued by them. Occasionally, they will settle for less than the original debt. I looked up all the laws regarding debt in my state to get it to work out better in my favor. Do that before admitting the debt even exists or calling a company. (PM me if you need more details on that part) I don't have any experience with IRS debt or bankruptcy, so no little story there.

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