Get the scoop on marriage and money before you tie the knot.
Money Girl
227 MG Getting Married: How Does It Affect Your Finances?
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Up to four lines via virtual prepaid card, a left 15 days qualifying unlocked device credit service ported 90-plus days with device ineligible carrier and timely redemption required card has no cash access and expires in six months. Hi, friends. You're listening to the Money Girl podcast. I'm Laura Adams, author of the award-winning book Money Girl's Smart Moves to Grow Rich. Getting married is one of the most important decisions you'll ever make. Not only is choosing the right partner critical for your happiness, but saying I do also affects your financial life in ways you might not realize. A podcast listener named Britt writes, "My boyfriend and I are in our mid-20s and are trying to decide if getting married will help or hurt us financially. We have no children or other dependents, don't earn much money, and my boyfriend is still in college. I've heard conflicting information from friends regarding how getting married will affect our taxes and my boyfriend's eligibility for financial aid. How would tying the nut affect our financial situation?" When it comes to getting student financial aid, your eligibility amount depends on how you answer questions on the free application for federal student aid or FAFSA. The more income and assets you have that are included in the formula for determining financial need, the less aid you'll receive. Marriage plays into financial aid eligibility because it changes both your dependency status and your finances. For the purposes of the FAFSA, you remain a dependent of your parents until your 24th birthday, even if you don't live with them or they don't claim you as a dependent on their tax return. As a dependent, both your financial information and that of your parents must be figured into the formula that determines your financial need. Getting married gives you immediate, independent status, even if you're younger than 24. As a young married couple, your financial aid would probably increase without having mom and dad's income and assets included on your FAFSA. Therefore, if you and your spouse are not as financially well off as the student's parents, getting married before you turn 24 could maximize your student aid eligibility. However, if the parents don't earn much and have several dependents or other children who are also in college, you might benefit by keeping your dependency status and waiting to tie the knot until after graduation. Another way that getting married affects your financial aid eligibility has to do with your spouse's financial situation. If you're married, both you and your spouse must report your financial information on the FAFSA, even if you file taxes separately. If you walk down the aisle with someone who has significant income and assets, then getting married would instantly shrink your financial aid eligibility. If you were single, you'd only have to list your own income and assets, which presumably would be less and would result in you receiving more financial aid. To find out whether being single or married would increase your student aid, use the expected family contribution calculator at aidcalc.com. You should also contact your school's office of financial aid and speak to an advisor about your situation. For more tips about maximizing federal student aid eligibility, be sure to listen to podcast number 222 called eight ways to get the most student financial aid. Now, let's turn to the other issue in Britt's question, how does marriage affect taxes? Once you're married, you have to file taxes as a married person, even if you don't blend your finances. You must file as either married filing separately or married filing jointly. In a previous podcast called how does marital status affect your taxes, which is episode number 147, I explained that filing jointly typically gives you more tax deductions and credits, which results in a lower tax bill. However, depending on your income, that may not always be true. Therefore, it's best for married people to calculate their tax liabilities both separately and jointly, so you can choose the filing status that saves you the most money. As a side note, common law marriages, domestic partnerships, civil unions, and same-sex marriages are not recognized by the federal government as a legal marriage, which means those taxpayers must file as either single or head of household. However, a growing number of states that recognize same-sex marriage and have an income tax allow those taxpayers to file a joint state tax return. Married couples receive many financial benefits, including automatically inheriting their spouse's assets, even without having a legal will. Eligibility to receive social security survivor benefits if their husband or wife dies. Entitlement to benefits extended to spouses in the workplace, such as health and life insurance, worker's compensation benefits, if a spouse dies on the job or from a work-related illness, and fully funding an IRA for a non-working spouse. To find out more about how to take advantage of a spousal IRA, check out my recent podcast number 225 called IRA Contribution Rules When You Have No Income. This isn't a complete list of marriage benefits, but the bottom line is that getting married has significant, far-reaching legal and financial consequences that should be considered carefully. My advice for Britt is to get married only when she's ready and not to rush into a commitment just for a boost in financial aid. In addition, if delaying a wedding for a short period of time would help you avoid a financial hardship, waiting to get married could be a smart money move. After investing billions to light up our network, T-Mobile is America's largest 5G network. Plus, right now, you can switch, keep your phone, and we'll pay it off up to $800. See how you can save on every plan versus Verizon AT&T at tmobile.com/keepandswitch. Up to four lines via virtual prepaid card, a left 15 days qualifying unlocked device, credit, service, boarded, 90-plus days with device and eligible carrier and timely redemption required. Card has no cash access and expires in six months. I love learning and anything that makes learning easier. If you're a parent and your child needs some homework help, then Ixcel is a right for your family. Ixcel is an online learning program for kids covering math, language arts, science and social studies. Ixcel has interactive practice problems for topics from pre-K to 12th grade and everything is organized by grade and subject. As kids practice, they get positive feedback, awards, and explanations for wrong answers. 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Tomorrow can't wait. Your next starts now. We are the changemakers. MSU Denver. You'll find links to everything I've mentioned in the podcast plus more resources in the money girl section at quickanddirtytips.com. While you're there, be sure to sign up for the free money girl newsletter. Follow me on Twitter and join the money girl Facebook page. You can submit your money questions through social media or email me at money@quickanddirtytips.com. If you like the tips you get in the money girl podcast and want to take more control of your money, you'll love my award winning book Money Girl Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don't. It's available at your favorite bookstore in print or as an e-book for your Kindle, Nook, iPad, PC, Mac or smartphone. You can sample it by downloading two free chapters at smartmoves2growrich.com. And one more thing, have you ever wondered what "antebellum" actually means? 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