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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3123
Experience:  IRS licensed Enrolled Agent and tax instructor
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I am a divorced father of 1. I have a good income. I am

Customer Question

I am a divorced father of 1. I have a good income. I am engaged to a divorced mother of 4. We are getting married in a year. I am trying to find the best resources/ guides for advice as to whether or not we should get legally married. I'm trying to look forward to all eventualities like college costs (FAFSA), tax benefits or challenges of either situation, etc. I pay child support and she receives child support. There are a lot of things to consider so I am looking for expert advice.
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

Combining two incomes and dependents could be a good thing, depending on your total combined income. Child support is neither deductible to the payer, nor taxable to the receiver so it will not affect your tax situation. However, the FAFSA could be affected. Usually, if a child's parents have higher income, the child can loose his/her financial aid. When adding your higher income to her lower income, she may loose certain credits but her and her children's exceptions, combined with increased standard/itemized deduction can actually make up for it.

The last major thing to consider is the filing status. If one of you or both are filing head of household, combining your income your tax bracket may actually increase.

Because there are too many variables that could affect your tax return here's what I suggest. Use one of the online tax calculators, first your recreate your current situations write down your tax bracket and balance due and check the credits and than you create a joint return and see where you stands.

I will give you couple of links to online calculators:

http://www.tax-rates.org/income-tax-calculator/?ref=nav_income

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

Let me know if you have any questions.

Customer: replied 1 year ago.
I will play with the tax calculators. She has very little income as she is currently a student. We have agreed that I have no obligation to pay for their college so I'm quite concerned that by including my income, I'd be hurting them if it is required to be reported when applying for grants and financial aid for college.So I'm afraid that even with any potential offset in tax (although we'd only get to claim the children every other year) we'd be shelling a lot more out for college, or at least forcing the kids to.Are there legal documents that we can have drawn up that give us most or all of the same legal statuses of a married couple without the marriage license? We already have some documents for care giving, decision making, health care directives.
Expert:  emc011075 replied 1 year ago.

If she is a student and you get married, she will have to include your income for FAFSA calculation. Depending on your income, this probably will reduce or eliminate her financial aid. This same would apply to children as well. It is good to have those documents in place, however when it comes to taxes, IRS has its own rules to follow. Unfortunately there are no legal documents that will replace the marriage license and MN doesn't recognize common law marriage. Unless you get married, you will not be eligible for tax or other benefits available to married couples.

Customer: replied 1 year ago.
Well that is my question. What are the tax benefits of getting married? I didn't see my taxes go up when I got divorced so I'm having a hard time seeing what benefit there was in the first place.
Expert:  emc011075 replied 1 year ago.

If you are marrying somebody with little or no income her exemption will lower your income and your standard deduction will be higher resulting in lower taxable income. Also, as married couple you will get higher threshold for certain credits, like earned income credit or eligibility to contribute to IRA for instance. Also, certain dependents can be a huge benefit because of child tax credit or education credits. On the other hand, if your combined income is too high, you may loose certain credits or eligibility for certain benefits. For instance, if she is eligible for Medicaid, she will lose it by marrying you. If she is getting a large advance credit on her medical insurance (Obamacare), she may loose it as well.

Your taxes after divorce went up because I am assuming your ex got the custody of the child and could claim head of household and other credits associated with it, while you couldn't and if you were the primary breadwinner, after divorce your tax bracket went up us well.

Customer: replied 1 year ago.
Well she is on Medicaid so that would be a negative. I have 50/50 custody with my ex wife so I can claim my son every other year. What is considered too high? I make roughly 150k per year. I find that I already don't qualify for much as far as tax credits or offsets.
Expert:  emc011075 replied 1 year ago.

Well, your income will create an issue for her, she will definitely loose Medicaid and she will not qualify for any tax credit under Obamacare. So, unless your employer provides a good medical insurance she will be paying a lot for medical insurance on the private market. She and her children will also definitely loose financial aid and you will not be eligible for any education credits or even child tax credit at the same time she will pay more taxes on her income because of your tax bracket. On the other hand, it would be beneficial for you, because it would reduce your taxable income and most likely your tax bracket. If it is enough to offset what she will loose is a question. Most likely not. The only way to find out is to crunch the actual numbers.

Expert:  emc011075 replied 1 year ago.

Did I answered your questions? Is there anything else I can help you with today?

And if you found my answers helpful, a Positive Rating would be greatly appreciated. Thank you.