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Can common law marriage yield tax breaks?

| May 14, 2018 | Tax Law |

Common law marriage is a non-traditional type of marital union that does not involve a ceremony, a wedding certificate or an officiant. Under such an arrangement, a couple lives together, acts as husband and wife and holds themselves out to the community as being married. By so doing, they are treated as legally married.

Common law marriage is currently only recognized in a handful of states across the U.S. In a few other states—including Georgia—it was recognized previously but was later abolished. In such cases, common law marriages established before the date of nullification are still considered legal matrimonies.

Common law marriage and taxes

Georgia recognizes any common law marriage occurring in the state before the date of dissolution—January 1, 1997. If you and your spouse entered into a common law union in Georgia prior to this date, you can file your taxes jointly. In addition, if you and your spouse married under the common law in another state where common law marriage is legal, Georgia will continue to recognize this union if you move to this state.

Why does it matter?

Being married can provide significant tax benefits. For example:

  • If one spouse is unemployed, being married allows them to contribute to an IRA when they may not have been eligible as a single person.
  • If both spouses have employment with benefits, they can comparison shop and choose the plan that offers them the greatest tax savings.
  • If one spouse passes away, they can leave as much money as they want to their spouse without incurring estate tax. The same protection does not apply for unmarried partners.

Your common law marriage can qualify you for considerable tax breaks. Nonetheless, each couple’s situation is unique. It’s worth consulting with an experienced tax attorney to help you assess what actions will lead to the highest tax savings.

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