Financial benefits/drawbacks to marriage?

[mamamilkers]

I am completely clueless about how marriage affects two people's financial relationship.

A little background: I have great credit and but am a SAHM. My partner has a fantastic job, but we're working hard on paying off his debt, he has alot of bad debt with some stuff in collections. Neither of us has any assets, really. We rent, have one car that we're paying a small loan on, no other financial assets. We would love to buy a home before too long (as soon as we get some debt stuff straightened out).

So, how will marriage help or harm us financially? We eventually want to be married and I always thought that his bad credit would negatively affect me, but I don't know for sure.

[Herausgeber]

Your credit is your credit. His credit is his. The only way the become intwined is if you jointly sign loans. If you're going to need his income to pay for the mortgage, then you're smart to start working on his debt and credit issues.

[oneKnight]

Ditto what she said ^
I had great credit and DH didn't, we were able to boost his by paying his debts off with the snowball method (and some help from CCCS).

Then I added him as a secondary cardholder to some of my older accounts so he got the credit point benefits of having the good records, - THAT is where our credit becomes entwined.
That is entirely YOUR choice, you could put anybody and his uncle on there, nothing to do with your partner/hubby.

[quantumleap]

Being married will bite you in terms of tax returns (GST credit refunds), and in terms of student loans. You qualify for much less on your student loan if you are married. These things may or may not affect you, and I don't know if it's the same deal in the US (we're in Canada).
But, marriage is still a wonderful thing, in my opinion.
Katia

[phathui5]

I don't know how we could have bought our house if we weren't married. I'm sure they could have done it somehow, but being married certainly made it easier.

[Herausgeber]

Phathui5, what do you think would have posed difficulty if you weren't married?

My partner and I aren't married. We live in a house that I bought before we became a couple. We're house shopping now for a place we'll buy together. Being married or not married hasn't seemed to have affected the process at all.

[mamamilkers]

Thank you mamas for your insight. I also know people who had no problem getting home loans unmarried (my sister is one). I didn't know it negatively affected your taxes or that your credit remains seperate. That is good to know!

[tamagotchi]

Generally, if only one partner has income, or if one partner has much more income than the other, marriage will lower your taxes.

It's only a problem if both partners have relatively equal incomes.

This is assuming you're in the US.

[kijip]

If you are in the US and your incomes are roughly equal to each other you will take a big fat hit on your taxes in many instances. Basically, any combination that bumps you to the next bracket can be a worry. For example, unmarried couple with one making $15K taxable income and a second making $17K taxable income- marry and BOOM, you don't get the EITC (or get a much smaller one, based on family size) and you are in the 25% bracket instead of the 15%. You'll stay in the 25% bracket until $64K or so and then you go to the 28%. 10% means more to a family making in the area of $30K a year than 3% does to a family making $64K a year.

Our highest tax year was the year after we married- the year we both worked and had our son. Now that only I am working we are doing better tax wise.

[alicia622]

I remember the first time we filed taxes after getting married- it was a huge disappointment. This past year is the first time in 1 years we've had a nice tax experience since we were able to claim G!

[Herausgeber]

Originally Posted by kijip

If you are in the US and your incomes are roughly equal to each other you will take a big fat hit on your taxes in many instances. Basically, any combination that bumps you to the next bracket can be a worry. For example, unmarried couple with one making $15K taxable income and a second making $17K taxable income- marry and BOOM, you don't get the EITC (or get a much smaller one, based on family size) and you are in the 25% bracket instead of the 15%. You'll stay in the 25% bracket until $64K or so and then you go to the 28%. 10% means more to a family making in the area of $30K a year than 3% does to a family making $64K a year.

Our highest tax year was the year after we married- the year we both worked and had our son. Now that only I am working we are doing better tax wise.

Yep. This is why we are not married. Now that we have DD, we have talked about getting married for some of the legal protections it affords us in terms of more smoothly taking care of her, but our tax bill would skyrocket just as we actually need more money.

[tamagotchi]

Originally Posted by kijip

If you are in the US and your incomes are roughly equal to each other you will take a big fat hit on your taxes in many instances

Note that the OP is a SAHM. In her situation, marriage would probably have tax benefits. I'm a SAHM and our taxes are significantly lower because we are married.