By Dr. Joy Eberhardt De Master, WCI Columnist
It was 2016. The year of the US presidential election. The year the Cubs won the World Series. The year my grandfather died weeks before I gave birth. It was also the year I got divorced to save money.
Yes, you heard that right. I got divorced to save money. My then-spouse and I were looking at the numbers and creating a trust before the birth of our second child (or third child if we count the one that died in-utero). We spoke with our trust lawyer and floated the idea to our accountant. There was no reason we couldn’t get divorced and stay together. If we were divorced, we could file taxes separately. If we were divorced, my earnings didn’t pull up the financial burden of my spouse’s income-based student loan repayment; these loans were in the hundreds of thousands and could easily cost more than our mortgage of $2,390. If I wasn't in the picture, at least in a legally married sense, he could pay less on those loans.
Before you judge me, know that we took out as few loans as possible and tried paying them down. In 2013, my spouse/partner lived away during the week (home on the weekend) to complete their doctoral-level training. (Yes, it was one of the many hoops to get the doctoral degree.) I started a new pediatric job with a large organization (aka more money, like twice the amount!) and cared for our toddler. We paid over $1,000 per month in an attempt to pay down the student loan interest so it wouldn’t be added to the principal, aka becoming compound interest. We paid for two households and childcare. My income doubled, but it didn't feel like much with the new expenses—childcare from $895 to $1,300 per month, rent for a room $600 per month, and who knows how much on gas with the long, long drive to and from Portland every week. It felt futile.
With a second child on the way in 2016, ballooning childcare costs loomed before us—$2,000 per month for my daughter’s part-time nanny and $1,200 per month for my son’s preschool. We also needed a bigger house for a larger family.
We decided to get a divorce.
More information here:
Navigating the Finances of Divorce
Why We Got Divorced to Save Money
How it happened was that the lovely online tax service people often use, which we will refer to as Urbot Axt, gave me the option to pick Head of Household on our tax return. So, I picked it. I noticed I saved money with this designation vs. the Married Filing Jointly option. I played with the numbers and realized over the course of a year that we could save, easily, several thousand dollars. I realized I could not pick that option because we were married, and I began wondering what the benefits of marriage were—at least tax-wise. It turned out there were none for me. And so I got a divorce.
When people talk about the expense of a divorce, they are not talking about the actual process of getting divorced. The process to get divorced in Oregon is annoying but not expensive if you involve no attorneys and live in the same household as your ex. My ex and I did this. And we saved money. I could file as Head of Household. My ex filed as Single. We became partners instead of spouses.
Yes, we were both on board with the idea. Money was a stress. Getting divorced was a way to deal with that stress. West Coast living and parenting are not for the faint of money. The divorce wasn’t ideal or even desired but simply a practical choice to support our children.
We didn’t make it public knowledge. Our families still don’t know, unless they read this column. (We have not actively hidden it from them but have felt that, coming from a conservative religious background, it could cause a rift where a rift wasn’t needed.)
What’s annoying about getting divorced is the stale parenting class, the fact that pregnancy is not viewed as a factor in the divorce decree (the child doesn’t “exist” until it is born, even at 40 weeks gestation), and a judge that doesn’t believe a couple can “figure out parenting details.” We had our divorce rejected by the court due to insufficient data for how we would parent and how expenses would be decided. Twice. When my second child (or third child, depending on how you count) was born, we weren’t sure if we were divorced or not, due to the slowness of the court process. It was rather silly. The registrar in the hospital completed an extra form—in case we were divorced—to acknowledge that my child's father was, in fact, her father.
Soon after the birth of our child, we got documentation from the court that we were officially divorced.
More information here:
Financial Checklist to Complete After Divorce
Has Gotten Divorced Saved Us Money?
Has it been easy? No. Has it been worth it? Yes. Relationships are worth it but not easy. I would say the divorce hasn’t changed our relationship. Parenting has, though. The life of a parent is exhausting and, sometimes, rewarding. I say this with love and respect for all caregivers, including myself.
Have we saved money? Yes and no. Honestly, our expenses have increased with children. Living with neurodiversity is a level of expense of its own with psychological assessments, doctor and therapy appointments, and social and educational supports. Yet, neurodiverse people are also the reason I am even writing this today on a computer in a building with electricity and heating. (There is a reason some children are called twice exceptional.)
Have we picked a better future for our children? I think so. By being divorced, we’ve had more financial flexibility, which has led to job flexibility. We are with our kids more. We can advocate for their needs. We can play with them.
Now, my partner and I are considering whether we should get married again. The new tax laws make it less advantageous to be divorced. Maybe we can. Maybe we will. Until then, we are divorced and living in the same household. And that's the way we like it.
Have you ever thought about getting divorced to make your relationship more tax-efficient? Is this something you would ever try? What kind of pitfalls and advantages do you see? Comment below!
Thank you for sharing your story. Have you considered married filing separately? I’m curious to know if that was an option that you explored. I was recently advised to file separately for tax purposes being that I’ve always filed jointly, paid more in taxes and now have a new plan to pay down my student loan debt.
It certainly works when enrolled in the PAYE IDR, but it wouldn’t accomplish a lot of what can be accomplished by not being married. While there are both marriage penalties and marriage bonuses in the tax code, there’s no doubt that some people are financially better off not married.
Personally, I would never consider this as I see marriage as far more than just a financial contract, but I get asked about doing this all the time privately so I’m not surprised to see that someone actually did it!
What are the benefits of not marrying? From a strictly financial point of view ?
Hey Raphael strictly speaking if you are 2 high income earners there is a marriage penalty. If you were not married both of you would not hit the highest tax bracket until both of you made combined over 1 million bucks! If you are married, you hit the highest tax bracket at almost have that amount at $628k.
And also in this writer’s example, somebody with very low income by high student loan debt their IBR would suddenly get jacked up by marrying a high earner.
Thank you for having the courage to write this post.
I have to ask some hard questions here though:
1) is there a moral hazard you are creating in choosing to change your marital status solely to benefit from taxes?
2) why are you not up front with your family about this if you are not doing anything wrong?
3) how have you structured your will to accommodate for the divorced status? How will you change the structure if you decide to get remarried?
Regards,
Psy-FI MD
Who cares what the family thinks. Just because someone gets upset about something, doesn’t mean you’ve done something wrong. People get upset about all sorts of silly things.
Family, especially if one is very family-oriented, can be a good barometer of whether one of the member’s decisions fits his or her character. It’s a completely reasonable question
Interesting. It seems odd that your state (and others) was so interested in your contract with your prior spouse.
I think “the marriage tax penalty” should be corrected further as “unequal treatment under the law.”
“Tax reform helped level the playing field, but married couples may still find themselves at a disadvantage at tax time.”
The tax brackets for married couples are now double those for single filers in all brackets except the top two (35% and 37%).
At this point, one might be able to reduce any actual difference in other parts of the family budget, unless you are in those top brackets.
I wish your family the best, married or not.
Very interesting story. You list various expenses you had but don’t list how much money you are now saving in taxes or in reduced loan repayments. Knowing whether it was a few grand or tens of thousands a year might help the rest of us understand what the true benefit is in this scenario vs the downside of divorce.
Talk about the $ tail wagging the dog, holy cow!!
Then you don’t have to do it. This was the right decision for her and you can do whatever you want.
That wasn’t the right decision for anybody. It’s ethically wrong and as others have stated probably illegal, or at least would not hold up in tax court. And then she’s considering getting married again?? What then, get divorced again if tax laws favor it? What nonsense.
Not sure about ethically wrong as in their hearts this couple is still married, and doubtful it is illegal as they did legally get a divorce.
if you are 2 high income earners there is a marriage penalty, and tax law is made to encourage citizens to act in accordance of how the governemnt wants you to act. So the government overall does not want 2 high income earners to get married, or they do not want in this writer’s case a low income earner in an IBR student loan program to marry a high income earner. If the government sees this situation as unintended and unwanted side effect of tax law, they will change the tax law, and yes, I do not see a problem if the writer decides get married again. This writer is only responding to how our government wants us to act as citizens through the only way they can make us, through tax law.
Ethics:
Hire a good defense lawyer.
You see, they tell you to plead the Fifth. Perfectly legal, no need for self incrimination . No conviction.
Perfectly legal tax evasion.
Right? Ethics of convenience.
Good grief! This post is…
This post is just… I’m almost speechless.
The author is clearly conflict avoidant and using that as her defense mechanism to mask the obvious tug on the conscious she had. Plus the author doesn’t really go through the expenses and just “we tried”. Again just sounds like so much self-justification to take the “easy way out”.
Day-care is expensive but there are ways to mitigate it, there are ways to reduce costs, and you’re a doctor for crying out loud your income is greater than 95% of the US population and they find a way to manage.
Most importantly though, Marriage isn’t just a designation on paper. Marriage is intended to mean WAY MORE than that (whether a person is religious or not).
Final thought: I think it’s interesting that WCI often comments on how he strongly advises any sort of speculative play (including simply purchasing an individual stock) and will comment on other “questionable investing choices” when people submit questions but no commentary here on divorcing for a couple grand which btw if audited would not actually hold up in court their audit risk is fortunately enough very low.
TL DR: So many questionable choices with a tax choice that wouldn’t hold up if it ever went to court.
We are relieved that you are speechless because nothing you are saying is informative or though provoking.
Poor psychological evaluation on your part.
Anytime someone says that “your X is greater than 95% of population” is always followed by some scarcity mindset. Perhaps she has more of a creative mind and wants to maximize her finances. I don’t care what 95% of people do. 95% of people don’t do a lot of things I do, which is why I am more financially independent than 99% of people.
Actually that is literally what marriage is. Just introducing government into your love life. Anything else it is, is not real, its just your perception of it, just the story you created in your head about it or are conditioned to believe based on some movies you probably saw. Obviously you can have a happy relationship with someone without marriage.
What evidence do you have that this wouldn’t hold up in court? This is just your bad opinion and you are trying to make it sound more credible by saying it definitively. If all the legal channels are followed, of course it would hold up.
Wow, so much negativity.
Thanks to the poster for sharing her story. My husband and I got married for the tax benefits. At the time we had been together and cohabiting for 8 years. I had identified him as my domestic partner during residency so I could add him to my health insurance and realized in my first year as an attending that we could save $5K on our taxes if we were married by Dec 31. So off to the courthouse we went.
Almost 10 years later, we are still married and enjoying the tax and social benefits. We hosted a wedding event for our family and friends 6 months after our legal wedding at the courthouse. We never told our families about our courthouse wedding- not because we thought we had done something wrong but because it was no one’s business but our own.
While I enjoy the benefits of marriage for my family (my husband and I, no kids), we are not defined by a piece of paper from the government. If the financial benefits of divorce were substantial enough to outweigh the benefits of marriage for us, I would consider it.
One of the reasons we brought on columnists at WCI is to provide different perspectives (the other is so that WCI doesn’t disappear if I get hit by a bus). This is certainly a different perspective. Personally, I wouldn’t get divorced for a couple grand a year. I wouldn’t get divorced for a couple hundred thousand a year or really any price. I see marriage as far more significant than a financial contract. But I’m well aware that many people do not. This provides perspective (and a technique) for those who view it as just a financial contract.
However, you and another commenter are the first people I’ve ever heard say the government or the IRS could have a problem with this technique. I don’t understand why nor how they would really enforce such a thing given the number of co-habiting people out there, but I’d love to hear about a tax court case or even an anecdote of an audit of someone the IRS called on it.
WCI, I think the idea that it’s illegal or against the tax code is simply untrue.
I did find this article: https://www.kiplinger.com/personal-finance/603605/want-to-save-on-taxes-consider-a-divorce?amp
It does seem a lot of work for a few thousand dollars, but I did see an article saying the marriage tax penalty before the tax changes in 2017 could be “12%”. So, if one owed $100,000 in tax, it might be worth $12K?
It’s always interesting to see what people do and why.
Many would cut $1000 a month out of the budget to skip this divorce tax plan, but “to each, their own”, unless it really is disallowed by the IRS. I don’t think it’s illegal however.
Of course you could become a whistleblower and collect 10%.
Just an intellectual exercise to see how the IRS handles it.
I doubt the student loan folks would care.
Stir the pot!.
10% whistle blower on the line.
Report it and see what the IRS does.
Just a way to follow up and get another article.
You guys need to look below, at comment 8, where I cite chapter and verse demonstrating that it does not appear to be illegal, at least not unless you’re rapidly cycling back and forth between married and divorced.
I think the IRS angle would come into play if the “divorced” couple still qualified as having a common law marriage. Such as, say, by holding themselves out as husband and wife to their family and friends, as this couple is doing.
Fortunately for them, though, the state of Oregon doesn’t appear to recognize common law marriages. So they may have dodged that particular bullet, provided they don’t ever move.
Why would the IRS care about Oregon law?
I have been pretty surprised by the negative responses to this article. I think the author did a great job and I commend her for being so open and honest.
This sort of thing is more common (at least in some areas of the country) than many suspect – but of course people don’t talk about it – the comments on this blog demonstrate why – who wants to be judged negatively? I know several couples who had weddings before 2017 but never signed the marriage certificate. In all situations it was two high income earners.
In our situation at the time, the marriage penalty ran between 25,0000 and 30,000 thousand a year. It is less now after the 2017 tax reform, but it still present (double the mortgage deduction, double the SALT deduction, Obamacare investment tax, there is still an income tax penalty for many high income earners, there are some deductions you can qualify for if you keep your income less, and state income taxes often have marriage penalties). And of course the 2017 law sunsets in a couple of years and many of the tax proposals have included bringing the marriage penalty back to its previous level so it may well return.
For many people who are not religious and see marriage as a legal and financial contract with the state – these are real costs and for those with high savings rates – the extra taxes come straight the couple’s net worth with all the lost compound interest early in your career.
Maybe people are less judgmental for those that never get married (even though everyone who knows them thinks they are) than for those who get divorced – but I see little difference – and it can significantly lower your tax bill, depending on your situation.
Putting aside the moral and ethical implications, this practice appears illegal.
I’m no lawyer or accountant, but the internet has several reference to the IRS addressing this situation in Revenue Ruling 76-253.
I think that ruling (and it’s 76-255 I believe, not 253) only applies to the year of the divorce. After that, you’re good to go.
https://www.taxnotes.com/research/federal/irs-guidance/revenue-rulings/rev.-rul.-76-255/dc2r
https://www.accountingweb.com/tax/irs/the-twisty-rules-of-using-marriage-or-divorce-as-a-tax-shelter#:~:text=The%20party%20poopers%20at%20the,only%20for%20additional%20taxes%2C%20but
“The party poopers at the IRS issued a prim warning: Revenue Ruling 76-253 specifies that the agency will disregard a divorce obtained solely to save taxes and will require the couple to recalculate their taxes as if they had stayed married for the entire year, making the couple liable not only for additional taxes, but also for interest and possible penalties.
But a beleaguered IRS concedes that there’s nothing to stop couples from filing as single persons as long as they get a regular divorce and simply live together out of wedlock.”
Here’s the IRS words:
“The true nature of a transaction must be considered in light of the plain intent and purpose of the statute. Such transaction should not be given any effect for Federal income tax purposes if it merely serves the purpose of tax avoidance. In determining whether it serves the purpose of tax avoidance all of the surrounding facts and circumstances are to be considered. Neither section 143 nor section 6013 of the Code or the applicable regulations thereunder contemplates a “sham transaction” designed to manipulate for Federal income tax purposes an individual’s marital status as of the close of a taxable year. See Gregory v. Helvering, 293 U.S. 465 (1935), XIV-1 C.B. 193 (1935).
Accordingly, C and D for purposes of sections 143 and 6013 of the Code were married individuals as of the close of the taxable year 1975. Therefore, for 1975 they must file either a joint Federal income tax return or separate returns using rules for married individuals filing separate returns.”
But keep in mind with this ruling the couple was getting divorced in December and remarried in January of each year. Getting divorced permanently (or at least for years and years) is a very different thing and it seems to me, very unlikely to result in an issue with the IRS.
Completely ignoring the societal and “moral” issues at bay here, there are a couple of legal issues with this method of avoiding taxes.
First, the IRS not feeling it’s worth the effort to go after violators doesn’t make it legal, it just makes it an unenforced law. Just like going 5 mph over the speed limit is still illegal even though most police officers wouldn’t consider pulling you over for it.
But second, and perhaps more importantly, is the legality of the divorce itself. Oregon is a no-fault state for divorce, so a divorce can be filed for any reason, but it does require that the parties have “irreconcilable differences” that have caused a “breakdown of the marriage” (Or. Rev. Stat. § 107.025 (2021) – https://www.oregonlegislature.gov/bills_laws/ors/ors107.html#:~:text=%20%20%20%20%20%20107.025%20Irreconcilable%20differences%20as%20grounds%20for%20dissolution%20or%20separation.%20%281%29%20A%20judgment%20for%20the%20dissolution%20of%20a%20marriage%20or%20a%20permanent%20or%20unlimited%20separation%20may%20be%20rendered%20when%20irreconcilable%20differences%20between%20the%20parties%20have%20caused%20the%20irremediable%20breakdown%20of%20the%20marriage.)
Considering that Joy and her husband did not have irreconcilable differences and were wanting the divorce purely for financial reasons, then going through the divorce in Oregon was lying to the court. Now, to me, that’s a big issue, even worse than trying to avoid taxes because, unless they got around that requirement somehow, it effectively amounts to perjury, which is a big deal.
If they had gone elsewhere to get the divorce (say a foreign court that allowed the divorce for any reason and that divorce still had legal bearing in the United States), then that just leaves the legality of getting a divorce to avoid taxes. And if they didn’t file separately in the year they got divorced, then that’s not even a legal issue, but it is maybe a social one, especially with all the arguments against corporations and the very rich using tax shelters like Panama and Ireland to not pay their “fair share”. But that’s about it.
I’m a cheapskate and do get the sentiment however. Saving money is in my blood and it makes sense. Especially since they’re keeping with the point of a marriage in values, just not name. Not that I’d likely make the same decision if I were to ever get married, but I do at least understand it. Just… those legal issues are problematic to me.
I would think this post was a farce if I didn’t know people like this actually existed. I would declare bankruptcy before I disposed of my marriage in a tax scam to save some trivial amount of money.
I think other commenters are being overly judgmental. Saving money on taxes is a very tangible benefit and the marriage penalty can be quite high depending on income level, tax credit phaseouts, state of residence etc. We all know that taxes affect behavior so why would you judge a rational response to incentives?
I’m curious if being divorced made it more difficult to get family health insurance.
My wife and I had a similar situation where I had student loans and she was working. Did you look at staggering your tax filing status? Most of the loan repayment plans allow you to use the previous year income filing so if you switch back and forth between married joint and married single, you get the benefit of your AGI being low in the eyes of the loan but retain some of the tax filing benefits of married filing jointly. Just a thought!
How would this work?
WCI,
Huge, huge, huge fan. Thanks for all you do.
Haters,
I don’t think that people should partake in religious rituals that they do not believe in, but there are obviously tons of people who have married due fully (or at least in part) to the societal benefits, be it favorable tax treatment, insurance, etc. Getting divorced for the same reasons strikes me as the logical inverse. Why is there this moral opprobrium for one and not the other?
Agreed. We aren’t religious and aside from some odd concern my part about the term (and status) bastard (I read too many British novels) which might’ve made me delay the kids if we weren’t married yet, the only reason we are married is because the Army didn’t acknowledge that we wanted to live together until we got married (he was being moved and marriage let me go with him- too bad it didn’t let him stay put). Or as I like to quip “We had to get married. He was pregnant.” He regularly asks when I have him sign the taxes “should we get divorced [or file separately or claim our moms/ your brother as dependents or get a Swiss bank account] to save on taxes?” BTW the answer to all that is “wouldn’t save much/any money or illegal so I won’t do it, dear.”
We took part in a civil ritual for the social/ economic benefits and remain in it for similar reasons. We were actually married by a Protestant Army pastor in an Army chapel since that was what the Army provided, and the Catholic priest we wanted wasn’t allowed to since we aren’t Catholic.
Just goes to show that the government should not be in the business of defining marriage.
Beyond stipulating that it’s between consenting adults.
I dont think people realize just how deep the rabbit hole goes….
So just maybe unless you do you should withhold judgement….
Like the author or marriage has felt the burden of this penalty. We discussed doing exactly what she did. We did discuss it with our families in fact. To this point, we are still “legally” married.
I think the main point is legally….in all other real ways. We would and im sure the author is really married. Just not legally.
We wish we didn’t go to the courthouse and just got married in the church. Life would be so much better and easier.
This story is just the tip of the iceberg. There is such I huge penalty in or case….not just a few thousand $. No child credit, no child care deduction, no subsidies for Healthcare even if you qualify for Obama care, higher tax brackets, 5%of my income more applys to the student loan….on top of the bump in tax bracket for each of us. We know some of this going in but the rabbit hole just got deeper ….
I could easily write an article on just how deep it goes.
Please do.
But bear in mind there are both marriage penalties and marriage benefits in the tax code. Where you land depends on lots of things.
I believe this is not allowed… but would like to hear more….
I have talked to some accountants and do think it’s legal to get a divorce…but switching between filling joint/separately is not. Mt dads an account and I have spoken to at least one other that said divorce would be the the best Financial decision by far.
Why can’t you switch between MFS and MFJ? Never heard of that.
Not that I would ever consider it, but it would be interesting to see a comprehensive description of the tax and non-tax tradeoffs. There are a lot of non-tax consequences of either choice.
As for whether one should let the financial considerations dictate decisions about marriage-clearly a personal decision. I have relatives who have been together for decades, raised kids, the whole thing. Never got married. Now their kids are in long term life committed relationships, with kids. All without benefit of marriage.
No one’s business but their own.
It’s definitely interesting to think of all the financial and legal aspects of marriage, but it’s pretty weird for me to think about marriage in those terms as I see as something so much larger. Kind of like having kids that way. Yes, there are financial and legal aspects of having kids. But deciding whether or not to have them based on those seems crazy. I feel similarly about marriage.
Look at it this way. There are two decisions
1. Should a couple make life long commitments to each other, have a family, approach all the complexities of life together?
2. If the answer to #1 is yes, should they include marriage as part of the package?
Number 2 is not necessary for number 1.
It is largely historical relic from a more superstitious time. By tradition, the two choices were linked in the eyes of the government and society. As society has opened up and legal structures have changed, one can have #1 without needing #2.
Thus, #2 becomes optional and each couple has to decide how to value the societal, traditional, religious and governmental implications of “1 without 2” vs “both 1 and 2.”
The financial implications are part of the governmental element. Differently situated couples may have different outcomes for getting married.
For older couples things like inheritance, Social Security and retirement benefits become major considerations.
For younger couples for whom near term death is highly unlikely and perhaps there is little in the way of assets to pass on, these issues are of little or no consequence.
I know many people who have weddings performed by lay people. They have receptions, friends gather, everyone congratulates them, etc. A fair number of those whom I know well enough that they would tell me never included the state in this. No marriage license. Some had looked into the finances and decided against it. Others thought their relationship was between each other and were happy to include their friends and family. They thought it was none of the state’s business.
Some of this is certainly sampling. I cannot recall ever going to a wedding held in a church or officiated by clergy. I am sure it happens all the time, but apparently not in my family or social circles.
I understand your argument.
I simply view marriage as far more than a legal contract. To me, it’s a whole lot more than a commitment to share your life, much less a commitment to split up your assets if you go your separate ways. Far from a historical relic from a superstitious time, it’s virtually the entire point of my existence. Even if there were no such thing as marriage in the eyes of the law, we’d still get married.
So it’s kind of weird to see people who view it so trivially, but clearly those people are out there as evidenced by this post and the frequent questions I get about getting divorced (or not getting married at all) just to save money.
“Even if there were no such thing as marriage in the eyes of the law, we’d still get married.”
I do not follow. If there were no such thing as marriage in the eyes of the law, you would have exactly what people are talking about. A lifetime commitment, with no legal document or government approval.
You could even have a wedding. With or without clergy. “Getting married” just means in the eyes of the law.
Not to me.
I also think it’s a problem for our society to not encourage marriage in every way possible.
I get that “marriage” means a whole lot more to you than recognition of your spousal relationship by the state. It does to me too and probably most folks, but wouldn’t you consider state recognition to be one of the least important aspects of your marriage?
The author here could and probably does have a great family and a great marriage… even after her divorce. It sounds like she kept literally every aspect of her marriage, but cut out the state. Where is the moral hazard here?
Yes, state recognition is not the most important part. But the main part, the commitment between spouses and God for eternity, is so important for both the happiness of people here in this life and in the life to come, that the state should be bending over backwards to encourage it with extensive legal protection and financial incentivization.
If there were no such thing as legal marriage, what would be the difference between a couple that promises to spend their lives together but does not “get married”- no marriage license- and a couple that “gets married?” The second couple could not get married in the eyes of the law if such a status did not exist.
What would the second couple do that would distinguish it from the first?
The issue is we’re using the word marriage differently. Perhaps it would help if we used two different phrases.
To me, marriage is the commitment a couple makes to God and each other.
To you, marriage is some sort of state thing.
The first is so important that the state ought to be bending backward to encourage it. The second is just a set of laws and non governmental entity policies. They used to be blended together, but are now being torn apart and made into two things. Which I think has serious consequences for society now and in the next world.
Getting there.
“marriage is the commitment a couple makes to God and each other.”
I am saying that one can have that without the state’s involvement. In relatively recent times in the US, the state would forbid certain people from getting marriage licenses, based on their races, for example. As far as I am concerned, those people were married, they just did not have the state’s blessing. They needed the state’s approval to get the legal benefits of such recognition. But if they would be better off overall without that legal designation, then they would be in the same position, without a license, as if their marriages had been recognized by the state.
The article is about undoing the state part of marriage, leaving the rest intact. The people are still “married” for any other purposes.
This is where every married couple would be if there were no such thing as state approved marriage.
I am sure you agree that people can be married without the involvement of God either.
Again, we’re using that word differently. We need two words to have any sort of conversation that isn’t talking past each other.
I completely understand the views of the author. My spouse and I got legally divorced when he started med school in our 30s. Because the med school determined that his family contribution wasn’t coming from his parents and instead came from me, the earning spouse, he qualified for no financial aid. We essentially wiped out all our savings and assets to pay the tuition and living expenses during Year 1. After the divorce, he no longer could report any income or assets and therefore qualified for multiple student research grants, scholarships, as well as generous no-interest loans offered by the school. It’s been many years since I did the math, but I recall we probably saved around $150k over the 3 years, which was a lot when you’re at $0 net worth. In the meantime, I saved what I could from my job so that we could start saving for paying off the med school loans, for retirement, and other long-term goals. We got married legally shortly after med school finished. Our families never knew, and only close friends knew and could provide support, particularly the attorney friend who instructed us on how to file the non-contested divorce paperwork in court.
Yes, there are a lot more benefits/penalties associated with marriage than just what is in the tax code. Thanks for providing some relevant examples.
Money is everything. If you are not willing to bend your family, social, and ethical decisions around maximizing your tax advantages then you can hardly consider yourself a competent investor. This article may not have addressed the ramifications for healthcare, emergency decision making, clear communication of expectations with your spouse, and the message sent to children by this decision but those things pale in comparison to the importance of having a nice boat. I think divorcing for money is both cost effective for a large portion of WCI readers and there is no foreseeable situation where someone who employed this pathway to save money would regret this decision. Good advice!
The sarcasm meter is going crazy for some reason.
I feel like you are confusing recognition of your relationship by the state with… well, everything else.
Plenty of people never get married and have loving lifelong relationships inclusive of all of those things you mention. For reasons that seem to have absolutely nothing to do with her actual spousal relationship, the author realized that recognition of her union by the state was no longer serving her and her family and then they undid that “mistake”. Still don’t see the problem with that.
Hey guys, I mentioned this above but I think worth reiterating. We have to keep in mind that tax law is a way for the US government to manipulate us into how they want us to be and act as citizens. The US government would like us to have one breadwinner, and one stay at home parent to watch the kids. So hence there is a marriage penalty for 2 high income earners. Or they do not want in this writer’s case a low income earner in an IBR student loan program to marry a high income earner, probably because they believe those high student loans translate into that low income spouse will one day become high income. If the government sees this situation as unintended and unwanted side effect of tax law, they will change the tax law, and yes, I do not see a problem if the writer decides to get married again if tax law changes favor marriage. This writer is only responding to how our government wants us to act as citizens through the only way they can make us, through tax law.
that’s why we also get deductions for giving to charity, getting into real estate, and starting a business. the US governement wants us to give and be generous, create housing for people, and be entrepreneurs. Again, this writer is only responding to who the governement wants us to marry. In no way does it compromise what she feels in her heart. The tax code can tell you who you can marry, but not who you can love.
Lots of interesting feedback via email on this one too. We love getting feedback, positive or negative.
# 1 Dark and uncomfortable read. Thanks ( I think).
# 2 WOW. That seems a bit too far to pay off some debt.
# 3a WCI Team,
I love your blog but this is below your standards. I’m concerned you’re starting to pick clickbait titles over sound financial advice. Maybe indignant responses was the goal of this article, I dunno, but I was pretty put out by this.
This is not an informative article. This is not sound financial advice across the population you serve and it does nothing to delineate the narrow (non-existent?) subset of your readers this may serve. This doesn’t provide any numbers or information to substantiate these pretty outlandish claims. Big claims need big evidence. The conclusion at the end basically said “We didnt save money and it doesn’t even matter anymore because the laws changed.” Why spread poor, outdated, impractical, unsubstantiated information?
I am excited that your website makes you lots of money, you guys have earned it. You’ve helped me a ton on my financial journey. I’ve learned a ton from you but if these types of articles become frequent then I will begin looking at other teachers. If I want controversy for the sake of clicks then I have other venues that provide that. I follow y’all for boring old financial advice to teach me to make boring, helpful decisions.
One readers perspective. Thanks for what you do, I’m sure you can’t make everyone happy.
# 3b (same reader) I will admit this was a learning article for me. I think I need to retract my complaining. When I read all the comments I realized that I didn’t think about this way other people did and there were situations where it worked out better financially. Sorry for the whining and thanks for taking the time to write back. Every so often I get reminded I don’t know as much as I think I do
I found this on where weddings are held. According to a 2017 survey, only 22% of weddings were held in a religious institution.
https://www.theknotww.com/press-releases/the-knot-2017-real-weddings-study-wedding-spend/
And forty three percent had a friend or family member officiate.
https://research.lifeway.com/2018/05/31/why-no-one-may-be-getting-married-at-your-church-this-summer/
These traditions are fading, but people are still getting “married.”
So, I’m assuming the “for richer and poorer” part of the vows wasn’t in the author’s. If you are amoral about wedding as any kind of spiritual compact, then I suppose the natural next question is, “for what amount of money would you do/not do this to your spouse?” For $5,000 would you tell your friends that your spouse cheated on you? If you could make ten grand, would you tell your kids that you’re no longer in love? If these seem far fetched, it’s because this is the logical conclusion of marriage (and divorce) for convenience. I understand the impetus; the government takes way too much of my money too. But to void the pact that I made with my spouse for a tax loophole seems unconscionable.
How did they “void the pact”? It seems their marriage pact is very much intact, they just cut the state out of it.
I think if you’re willing to lie to the state for the sake of a few extra dollars as someone who already is in the top 1% of income earners, you’ve put the marriage second to the dollar. If functionally, you’re married, but you tell the state you are not for tax purposes, you’re basically lying for money…and lying about your marriage.
No one is lying about anything. The state asks whether you are legally married. By getting divorced, you make the honest answer to that question “no.”
“Money was a stress. Getting divorced was a way to deal with that stress…The divorce wasn’t ideal or even desired”
If it’s just as simple as mentally checking the box from legally married to legally divorced, then why would the author say “the divorce wasn’t ideal or even desired”? It’s because the author acknowledges that divorce is a separation of at least a part of you from your spouse. The words divorce comes from the Latin word divortium which literally means a separation. If you “divorce” your spouse but claim that you’re still a couple, then you haven’t “separated” and are thus lying, in this case to the IRS. If you really have “separated” from your spouse, then you’re lying to him or her about still functionally being married. A wedding and the resulting marriage are an outward sign of a commitment to your spouse, much like a wedding band. If something as trivial as a few thousand dollars is enough to put that off, then that tells you how highly the author values her relationship with her…partner.
If your partner views marriage as simply a legal contract, then if the contractual obligations of each spouse aren’t met, you should leave them. If, however, it is truly a commitment, then you promise to uphold that commitment regardless of circumstances. Religious marriages capture that sense of commitment. If you want to just treat marriage like a contract you’d have with your cell phone company, then don’t call it a marriage, which has religious roots and implications.
Does this same logic apply to people who live together and start families, etc, and choose to never get married? I know lots of very good folks like that. They have wonderful relationships families and I certainly would not consider them to be living a “lie of omission”.
Maybe the difference is they never got married in the first place.
None of this has anything to do with the subject of this article.
The couple is not breaking up and no one was claiming they no longer loved each other. They still live together. All they did was dissolve the legal part of their marriage.
Many people do not include the “…death do us part” language in their vows.
Many people get married without a religious component to the relationship or the ceremony.
“Again, we’re using that word differently. We need two words to have any sort of conversation that isn’t talking past each other.”
How about “state sponsored relationship SSR” and ” traditional life agreement TLA?”
The couple in the article maintained their TLA but cancelled their SSR. They, or anyone else, can have a TLA without involving the state. They can have a TLA with or without having a ceremony. They can have a TLA with or without involvement of clergy. They can tell people they are married, they are not married, or tell others nothing at all about the nature of the TLA.
They can have a SSR with or without a traditional ceremony, with or without religion, with or without telling others.
The only requirement for either relationship is that they declare on their tax returns whether they are in an SSR. The state defines the conditions that determine the answer to this question. If the state disagrees with the couple about what constitutes a TLA, it does not matter. The state is not asking about the TLA and it is none of their business.
One could have both an SSR and a TLA. One could have either one without the other.
Using this terminology, if SSRs did not exist, then all there could be would be TLAs. This is what the couple in the article has- a TLA without an SSR.
No abandoning the kids, no telling each other that they are no longer in love. Just dissolve the unfavorable SSR and get on with life.
If they were religious and their religion dictated that SSRs must be permanent, then they would have to weigh that mandate against life’s realities.
I am no expert in comparative religion but of the religious people in the world, most adhere to faiths that existed long before 21st century American SSRs were defined.
Again, no expert but I suspect religions that require permanent marriage are referring to the TLA, not the SSR. If for no other reason than because the religion could not trust that the state will define an SSR in line with the goals and mandates of the religion.
States change. New monarchs or central committees come along and change the state rules. To the extent that a religion was interested in the opinion of some living human, it would care far more about the views of the ayatollah or pope, rather than a secular authority.
“Traditional life agreement” doesn’t begin to encompass my definition of marriage.
Look, I understand your argument. I just see it as really sad that anyone would make it. It basically means that a lot fewer people care about what I see as the “real marriage.” Which I think is really important.
Still not getting it.
I am saying that what you mean by marriage is TLA plus SSR. I did not further define TLA, so how could it fail to include what you mean by marriage? Anything you want to include in “marriage” is in TLA, except for the state sponsored legal element. And you are free to get the SSR if you want.
Or to put it differently, what other than a marriage license, would you include in “marriage” that would not be in a TLA? If there is something excluded, based on what do you conclude it cannot be part of TLA? Why not?
Would it help if I sent two nice young people over to your house to explain it to you?
Sending someone to my house to explain?
I don’t do in-person -COVID you know. And I don’t let strangers into my home without a good reason, like I have hired them to them to repair something.
But they are welcome to explain it right here at social distance and no burning of fossil fuel to reply.
Or does the answer involve statements they are not willing to put in writing? If so, another reason not to let them in my house, or even know where I live.
I think what WCI is trying to say is that it’s time for you to STFU.
I don’t know what STFU means. Something to do with marriage?
Afan and Jim you’re missing WCI’s Mormonism and sense of humor. He’s not saying STFU, he’s joking, saying two well dressed polite young (Mormon) missionaries could come by and explain his point in prolonged detail (which is often decried or abhorred by some, though not apparently as much as Jehovah’s Witness missionaries, as a nuisance). I was taught (pejoratively I guess, sorry WCI) that these missionaries are underfunded and hungry and should be fed and if I had need offered handyman work for money or food. To my shame the last trio (females- guess they travel in larger groups for safety) ate and 2 drank the cola I offered but the 3rd (in a heat wave) didn’t and I forgot to offer her plain water when I realised that (they aren’t to have caffeine I had forgotten). Hope she didn’t have heat stroke that day!
I’m not sure this is the place to correct all of the errors in your post, but there are several.
Missionaries aren’t starving.
Missionaries don’t work for money.
Women also travel in twos. Occasional threesomes are simply because there is an odd number of missionaries in the mission. If there are 201 missionaries, there are 100 companionships and one threesome.
People drink both cola and caffeine. Tea and coffee are prohibited though.
I stand corrected. And thanks for the info re caffeine! I hadn’t understood that. I have heard though they will help folks- and the trio I met left their phone numbers (and a tract I didn’t spot until after they left lol!) in case I later wanted help with my elderly mother or other tasks.
Wow. I may steal the TLA/SSR wording. It’s hard to have a coherent conversation when “marriage” is used for both. In WCI’s defense, in my faith also “marriage” as a sacrificial and sacramental bond that is the bedrock of communities. So maybe TLA/SSR/FFM (faith-foundational marriage) to really delineate what we mean?
I gave FFM the marriage word because religion had it first. 🙂
Via Facebook:
Overall, I think WCI does great work, but this recent post on using divorce law to avoid federal and state income taxes is in my view beyond the pale and could be viewed as endorsing tax evasion. I’m an attorney and I can tell you whether marrying or divorcing for the express purpose of saving money, or for green card purposes (immigration) is illegal. This is especially so in the case you highlighted where the individual divorced but remained in the same home, Co- owning other assets, raising children, etc. this would very likely represent a red flag to the IRS and whether or not they could actually be prosecuted, I don’t think this is something WCI should be seen as highlighting or endorsing.
Do you have case law on the IRS winning a claim that a couple was still married after a divorce?
Just what I posted above.
That question was for the lawyer you quoted.
I thank the author for sharing and recognize that she is by far not the first person to marry or divorce for convenience. Sounds like a responsible citizen and parent. So I don’t judge.
But the story bothers me. It’s faulty life advice. Does one of the couple want a real separation and this is a step? As for financial advice, it’s very short sighted and finances aren’t everything. Career is not everything. Excuse my old fashioned ways, but family is everything.
It reminds me of a story about docs joining the military to get medical school paid for. Then when the service payback came around, they disclosed that they were homosexual, true or not. They were discharged. Their justification was that it was wrong for the military to discriminate. It worked until it didn’t after Obama in 2010.
I wonder how many cases there are of this. I heard of one ObGyn who loudly declared his homosexuality when the war started way back then (’90s) and he wished to avoid deployment. And knew a cardiologist allegedly expelled for overweight who returned as a civilian doc same Army hospital and somehow managed to slim down.