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Financial Planning For Unmarried Couples

Posted by J.S.

October 5, 2008

It is a well-known fact that a significantly smaller amount of the unmarried couples will take the necessary time that is needed, and that is so important for sound financial management, then those of married couples will. Because of this fact, there are a few unique financial situations that are only relevant to the unmarried couples that are living together.

There are some very common and unique financial situations that the unmarried couples will face every single year, and this already large number seems to grow even larger year after year.

Unmarried couples and the tax situation that they face
When you consider the unmarried couple that is living together, and the federal income tax, you will notice that they actually seem to end up doing quite a bit better20than the couples who are married and living together. This is because the unmarried couples that are living together, are able to avoid having to pay the tax penalty that is known as the ‘marriage tax penalty’. This alone can save unmarried couples a considerable amount of money every single year, when the often-dreaded tax season rolls around.

Another benefit that a large number of unmarried couples who are living together will benefit in taking advantage of, is the fact that while you are living with your partner who is also single, you are able to also take advantage of filing ‘head of household’ on your tax return. As long as you qualify under a few guidelines, then you are able to file in this manner. As long as you have a dependent that you support, thus allowing you the ability of being able to claim the earned income credit – Providing that the income that you bring into the household is under the threshold, and you are able to take dependent and child care credits, are what qualifies you for being able to claim the20earned income credit. If you and your unmarried partner combine responsibility for the expenses of the household, this will normally be considered as a non-taxable sharing of the resources.

Financial and Health Issues the unmarried couple should consider
If you are in the situation where you are unmarried but living with a partner, you need to consider a will that will provide for your partner in the event of your unexpected death.

It could also be beneficial for you to make a durable power of attorney. This can help you in a couple of different ways. You can see that it will allow your partner to decide on important medical decisions for you, in the event that there has been some type of unexpected accident, and you are incapacitated. It can also give your partner the ability to make your financial decisions for you, when you are unable to yourself.

Financial Dependency
This can be a very big problem for individuals who have become so dependent financially on their partner, that if for whatever reason the partnership were to end, this could cause them a great deal of devastation financially. This is a common problem that can cause a large amount of concern for the unmarried couple.

No matter if you are a married couple, or a unmarried couple who lives together, it is very important to consider all areas of your finances to ensure that each partner will be protected in the event of a death, or if an unexpected break-up were to occur.