When getting married, single parents have additional financial implications to consider compared to their child-free counterparts. Marriage can have many financial benefits, but the potential costs often come as a surprise for single parents. Sure, there are obvious expenditures like a wedding and a prenup as well as the risk of an expensive divorce, but there are not-so-obvious expenses as well. This article will look at several potential financial costs of marriage including taxes, reduced financial aid, and changes to alimony and child support.

When two people with similar incomes get married, they may face a “marriage penalty” - or higher taxes as a married couple than as two single individuals. The marriage penalty is higher when a single parent gets married because they lose the “head of household” tax filing status. The head of household status is available to unmarried people with dependent children, and it comes with a higher standard deduction as well as more favorable tax brackets than the single filing status. 

Example: The table below illustrates how the lost standard deduction and favorable tax bracket would cost a couple each making $100,000 additional federal taxes if they got married. They would also become ineligible for full Roth IRA contributions.

The tax code has many additional provisions that may be affected by getting married. Several of these provisions reduce total household income deductions for a married couple when compared to a head of household filer and single filer. These include:

Health Savings Account Deduction – A person with a high deductible health insurance plan can deduct contributions to an HSA from their income each year. A single filer can contribute up to $3,550 while a head of household filer can contribute up $7,100 (if their dependent was covered by their health insurance). However, a married couple’s contributions are also limited to $7,100.

Flexible Spending Account Deduction – Some employers offer flexible spending accounts for medical expenses or dependent care expenses. Like an HSA, contributions to these accounts are deductible from one’s income. A single filer’s contributions are limited to $2,500 while both a head of household filer and married filers can contribute $5,000.

Student Loan Interest Deduction – Up to $2,500 of student loan interest can be deducted from income each year. That limit applies to both single AND married filers so if both spouses have student loan interest, their deduction could be reduced when married.

Example: The table below illustrates how getting married can increase taxes by reducing deductions.

Example: The tax cost increases even more when two single parents get married as illustrated below:

Additional income-based tax provisions to look out for when getting married include:

Roth IRA Contribution – The income limit to contribute to a tax-sheltered Roth IRA account is $137,000 for a single person and $206,000 for a married couple. 

American Opportunity Credit – Deduction of up to $2,500 per college student is limited to single filers with income under $90,000 and married filers with income under $180,000.

Earned Income Tax Credit – This is a refundable credit for low income workers, and it can be worth thousands. The amount of the credit goes down for every dollar earned over a threshold depending on the numbers of dependents until it is phased out.

The Additional Child Tax Credit, Dependent Care Credit, Retirement Savers Credit also decrease as income increases up to a phase-out limit.

Getting married can have major implications for a parent with college-aged children. The spouse of a custodial parent must include their income and assets in the FAFSA form to determine financial aid. Whether or not the stepparent is willing to help pay for college costs is not a factor in the formula. A couple in this situation may want to consider delaying marriage until after the children are done with college.

Example: The table below shows the difference in financial aid at two colleges before and after a parent making $50,000 per year marries someone making $150,000 per year:

Sources: https://app.myintuitionapp.org/institution/fb8aa3af-bfec-4df9-aa1d-4d973ff14cd0/costestimator; https://secure.osfa.illinois.edu/NPC/NPC.asp

Alimony – Remarriage and cohabitation affect alimony payments differently depending on the state. In Illinois, alimony payments terminate the day the receiving party remarries OR cohabitates with a partner. Remarriage does not affect the party who makes the payments, however,

Child support – In some instances, child support payments can be modified when the receiving party gets remarried. Usually the support payments are unaffected, however, in the past two decades Illinois courts have begun considering the resources of a stepparent as a factor in some circumstances, especially when the new spouse has significantly greater resources than the previous spouse.¹ It’s a good idea to speak with an attorney to make sure.

In some cases, courts will garnish a person’s tax refund in order to pay past-due child support and alimony. If you file a joint return with someone who is subject to garnishment, a tax refund you are owed based on your withholding can be garnished too. There is a process to petition and get your portion of the refund returned but beware of the potential headache before getting married to someone with past-due obligations.

There are numerous financial and legal benefits to getting married and they usually outweigh the potential costs outlined above. The benefits include spousal Social Security, the right to future alimony, the right to property accumulated during your time together, estate planning benefits, potential survivor pension benefits and those cute towels that say “Mr.” and “Mrs.”. But until you know the costs, you can’t plan for them. Besides, is there anything more romantic than breaking out a bottle of wine and a cost-benefit analysis spreadsheet?

¹Sources:

https://www.dupagefamilylawattorneys.com/dupagedivorceblog/remarriage-child-support-illinois; http://www.illinoiscourts.gov/opinions/appellatecourt/2000/2nddistrict/june/html/2991031.htm; https://www.atclaw.com/divorce-lawyers-illinois/how-does-remarriage-affect-child-support-payments-in-illinois