My wife and I have worked hard, and are both earning good salaries. So, I can’t complain too much. But, I will anyway.
I’ve run an estimate of our taxes for next year the way we always do it, married filing jointly. I also took a shot at estimating the taxes if everything were exactly the same, but instead of being married, we were both single. The results were somewhat enlightening; we would save A LOT of money on taxes if we got a divorce.
I don’t see a downside to this plan, except for one little thing. There is something of an emotional attachment to being “married” even if divorce were simply a financial decision. I have no religious issues with not being “married” and continuing our lives as they currently are.
Anyone else in this position? I can’t be alone here! Have you considered divorce?
The marriage penalty is well known, and some people have done as you suggest (not me though).
The issue would be, I think, all the other legal benefits of marriage outside of tax purposes. Things like being next of kin, inheritance, insurance eligibility, etc. Some of those you can get with contracts, some you can’t. Those usually make staying married worthwhile from a legal perspective (assuming you actually still like each other, which is what your OP states).
I understand that we’d probably have to get lawyers involved to write up things that are simply default to a married couple. We do have two kids, so it complicates issues a bit. But, that said, since we would be on the same page, it wouldn’t be an adversarial process. Just a contract stating that we are setting everything up exactly as if we are married, even though we are not.
I guess I don’t get why this doesn’t happen more often!
Yes, I am in the same position. No, I have not considered divorce. I alone make more money than I will ever really need, and my wife makes more than I do. I wouldn’t want to look myself in the mirror if I wiggled out of paying taxes.
I’ve heard of the “marrage tax” and have considered running the numbers like you have, but I knew I could never explain to my wife how divorcing her would save money. So I didn’t bother. I’d probably have to buy her another ring before she’d remarry me so the whole thing would cost more than it would save.
I’m with you. I wouldn’t mind if it were a small penalty. But, like I said, I was shocked at how large the penalty is. It’s not a small amount of money, and I confess that I’m a bit resentful that I’m penalized for making a decision to stay married for many years, which I thought was considered a societal positive.
Another interesting twist to this: Obamacare handout rules apparently favor, hugely, someone divorcing in certain situations. To the tune of $10K per couple.
Yeah. It’s kind of steep. I remember when I first figured it out, it went something like 1.) “Holy crap!” 2.) “Why?!” …and then I spent another half hour doing the math on different scenarios in order to feed my outrage.
(1) You cannot obtain all the benefits of marriage through contracts alone. As just one example, if one partner dies, you don’t benefit from the inheritance tax exemption. There are *hundreds *of such examples which cannot be contracted around–from Social Security to the FMLA to Hospital visiting policies.
(2) The cost of hiring the lawyers to do this is usually several years worth of the penalty.
A)You technically can’t get married for reasons other then love, but can you get divorced for them?
B)The judge doesn’t ask why you’re getting divorced, other then if the marriage is broken or if there are irreconcilable differences (I don’t remember which question it is), but you could say yes. You could even convince yourself you’re not lying (irreconcilable differences with WHO? etc) Eitherway, they’re not doing any digging. No one would know, you wouldn’t be forced to remarry.
Next time, try marrying a non-citizen, and have her immediately apply for a green card. Then see what kinds of questions a government official asks about the reasons for your marriage.
All things that I hadn’t considered. Is there any single issue that is insurmountable?
I mean, I get that it would be more complicated than just staying married, but the SS issue could be avoided by getting remarried when we are older (we’re in our 30s now) and the estate taxes could be minimized in various ways as well. We both have health insurance through our employers (who would cover cohabitating partners anyway) and despite being very pro-gay marriage, I’ve always thought the hospital visiting thing was way overblown.
In my state, to get a divorce you have to live “separate and apart” from your spouse for a year before you can file, and part of filing is signing a legal document that affirms that you did so. So, assuming you mean you’re looking to get divorced but not split up, it sounds to me like you’d be committing some perjury and/or fraud in North Carolina.
If by insurmountable you mean that there’s really no workaround at all, then yeah, there are tons.
If by insurmountable you mean a single benefit that obviously outweighs the penalty, then you’re asking a very difficult question. There are so many different benefits (depending on what state you live in and where you got married, among other things), and so many different circumstances (like whether you own a house or rent, etc.), that it’s really impossible to answer without legal and financial advise tailored to your situation.
A lot of the benefits concern what happens in unforeseen circumstances like an untimely death or incapacitating injury. I suppose a thorough analysis would involve gaming out the monetary consequences of, say, paying the inheritance task for your ex-spouse’s half of the marital property and comparing that to your income tax savings, and then repeating that for every single scenario and attaching some kind of probability. But honestly the whole thing would be so full of assumptions and probabilities that it really is sort of a crapshoot.
The hospital thing, by the way, isn’t overblown at all. It would be easier for you to lie and just say you’re married. Which will work for visits. But that’s not gonna fly for, say, end-of-life decisions. And having power of attorney is not the same as being married. For one, are you gonna carry a briefcase of documents with you on all vacations? When you’re snorkeling and wifey gets bitten by a coral snake? You may think that sounds silly now, but read some of the horror stories that gay couples have encountered who have done all the right things to try to approximate marriage and have it blow up in their faces in innumerable totally unexpected ways.
Yeah. It’s kind of steep. I remember when I first figured it out, it went something like 1.) “Holy crap!” 2.) “Why?!” …and then I spent another half hour doing the math on different scenarios in order to feed my outrage.