Couples & Money: Do Whatever Works for the Relationship

I’ve worked in financial services since 2000. During that time, I’ve had a chance to see how couples handle money together. It’s been insightful. Why?

Because when I first started helping clients manage their money I thought that EVERYTHING should be handled together. Helping them ACTUALLY manage their money changed that idea.

What I came to realize and what should have been obvious from the beginning, is that everyone is different. And that includes how people think and feel about money. Some people don’t care that much about it. Others see it as the ultimate form of security. Again, everyone is different.

What has also emerged from these experiences with couples and money is that there are 3 types of money relationships that couples have. Here they are:

  • Everything together
  • Everything separate and
  • Some joint and some separate

I’ll give a quick summary of each.

The first couples’ relationship type is the type that handles everything together. They have nothing but a joint bank account. They do their taxes together. They have joint investment accounts. The home is in both of their names. They see separate anything as almost “hiding” something from the other and could result in problems in the relationship.

The second couples’ relationship type is the type that handles everything separately. They bank separately, they file taxes separately. One doesn’t know what the other has in credit card debt or student loans or anything else. They just allow each other to handle what they are responsible for.

And finally, there are couples that mesh the two prior ideas. They not only have a joint account for shared bills and responsibilities but they also have separate accounts to handle their responsibilities.

But no matter what type of money couple a couple is, I’ve come to realize that as long as the relationship works for them, that’s all that matters.

So when it comes to handling money, couples just need to see what works for them.

For more on TaxAssurances, check out our reviews, photos and links on Google Reviews.

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Chapter from TaxAssurances’ Book: Marriage

The following post is a chapter in the TaxAssurances’ book, “Top 12 Tax Deductions You Might Have Missed. Tax Tips For People Who Do Their Own Federal Taxes.”

You can purchase the full book on Amazon.

Chapter 7 Marriage

Not only is a marriage a union based on love and trust it also offers tax benefits. For instance, married couples that file their taxes together have higher standard deductions and exemptions than individuals that file single, head of household or married filing separately. As a result, married couples most likely have lower tax bills.

There are couples however that decide to file their tax returns separately. While they do have it as a option, here’s how the IRS describes what they are giving up:

• “If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.

• Your tax rate generally is higher than on a joint return.

• Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.

• You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer’s dependent care assistance program is limited to $2,500 (instead of $5,000). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. For more information about these expenses, the credit, and the exclusion, see chapter 32.

• You cannot take the earned income credit.

• You cannot take the exclusion or credit for adoption expenses in most cases.

• You cannot take the education credits (the American opportunity credit and lifetime learning credit) or the deduction for student loan interest.

• You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.

• If you lived with your spouse at any time during the tax year:

• You cannot claim the credit for the elderly or the disabled, and

• You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.

• The following credits and deductions are reduced at income levels half those for a joint return:

• The child tax credit,

• The retirement savings contributions credit,

• The deduction for personal exemptions, and

• Itemized deductions.

• Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).

• If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

So as the list above suggests, if you’re married or getting married, file your tax return together. There are some real tax benefits.

For more information about being married and filing tax returns, read “Filing Status” on the IRS.gov website.

Again, You can purchase the full book on Amazon.

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Do a Quarterly Financial Review

470480e1gdwufwtHave you met with a professional and done a financial review lately? Every quarter I like to meet with my clients and go over any changes that have occurred in their lives. In many cases, the meetings give me the opportunity to find out what adjustments need to be made in their financial lives.

Life Happens

If there’s been a promotion, we may be able to increase the amount that is set aside for a rainy day or retirement. If there’s been a marriage or new birth, we need to make sure that family members have the right protection. If clients are no longer happy with their job, we need to map out a plan to find a new job or start a new business. Whatever the changes are, there’s a very good chance that my client’s financial life has been affected. I need to know that so we can tweak our prior plan.

Benefits of a Review

One of the major benefits that results from this quarterly review is that it helps my client feel comfortable letting me know what new things are going on in their lives. How? Some people may feel that they’re interrupting advisors. Scheduling a quarterly review sends a clear message that the changing circumstances are important. It also keeps the lines of communication open for events that happen between meetings.

One of the other benefits resulting from the meetings is referrals. Meaning, I get referrals for my business and my clients help those close to them. How? My clients have family, friends, associates and co-workers that need financial advice. Keeping the lines of communication open lets them know that they have a go to person in their financial life. Why not help others have that same peace of mind?

So if you’re working with an advisor, try to meet with them on a quarterly basis to go over what changes have occurred in your life and see how that can impact your financial life. Remember, the meeting may last a few minutes or hours but the impact can last a lifetime.

For more on TaxAssurances, check out our reviews, photos and links on Google Reviews.