Anaya Nolan
H&R Block provides tax services to individuals and couples, including those in common-law marriages. In the US, H&R Block helps couples understand the tax benefits and changes that come with marriage, including common-law marriages. In Canada, H&R Block also assists couples in understanding how their marital status affects their taxes, including common-law marriages. The company helps determine which credits and benefits a couple may be eligible for and how their tax situation might change. H&R Block also offers guidance on filing taxes when married to a non-US citizen, which can impact an individual's filing status and tax rate.
| Characteristics | Values |
|---|---|
| Common law marriage | Considered married for tax filing status if living together in a common-law marriage recognized by the state |
| Tax benefits | Lower tax rates, education tax credits, student loan interest deductions, child tax credits, earned income tax credit |
| Tax credits | Childcare expenses, Canada Child Benefit, GST/HST payments, spouse or common-law partner amount, combining medical expenses and charitable donations, splitting pension income |
| Filing jointly | Considered married if filed taxes jointly |
| Health insurance | Having health insurance together with a significant other is considered evidence of common-law marriage |
| Affidavit of common-law marriage | Signing this document establishes a common-law marriage |
| Foreign spouse | Filing status depends on whether the non-resident alien spouse is treated as a US resident or non-resident for tax purposes |
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What You'll Learn
Common-law marriage recognised by the state
H&R Block provides guidance on how common-law marriage is recognised by the state. Common-law marriage is a legally recognised union without a marriage licence or ceremony. In the US, common-law marriage is only recognised in a handful of states, including Oklahoma.
For a couple to be considered in a common-law marriage, they must agree to be married and cohabit. There is no specific time period for cohabitation, and the agreement does not need to be in writing. However, the couple must hold themselves out to the public as being married. One of the most common ways this is established is by filing taxes as married. Another way is by having health insurance together, as this often requires signing an affidavit of common-law marriage.
In Canada, the CRA and Revenu Québec recognise common-law marriage. To be considered common-law for tax purposes, couples without children must live together for 12 months in a row. If they have children together, they are considered common-law as soon as they begin living together.
In the US, the IRS defers to state or foreign law to determine the validity of a marriage to a non-resident alien spouse. A marriage in a foreign country is typically valid for US federal income tax purposes. However, there are different tax implications depending on whether the non-resident alien spouse is treated as a US resident or non-resident for tax purposes.
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Filing taxes married
Marriage can affect your taxes in many ways. While everyone’s tax situation is different, there are some benefits of marriage that may help you pay less in taxes than you’d pay as a single filer. Plus, you’ll have tax options as married taxpayers that single filers don’t.
When you are married and file a joint return, your income is combined, which may bump one or both of you into a higher tax bracket. Or, if one of you is a higher earner, that spouse may find themselves in a lower tax bracket. Depending on your situation, this could be a tax benefit of being married.
If you live in a community property state, filing a joint tax return may be in your best interest. A community property state is a marital property law where each spouse is considered to own 50% of all shared property acquired during the course of a marriage. Married taxpayers who file separately generally must report half of their combined marital income with deductions taken out on their federal return if living in a community property state. This is sometimes not tax-advantageous for MFJ filers.
You’re also married for tax filing status purposes if:
- You’re living together in a common-law marriage recognized by the state you live in, or by the state where the common law marriage began.
- You’re married and living apart, but not legally separated.
- You’re separated under an interlocutory (not final) decree of divorce.
If you meet any of the above criteria, you can choose to file as married filing jointly or married filing separately… UNLESS you accepted a premium tax credit under the Affordable Care Act. If that’s the case, you need to file as married filing jointly in order to receive the credit. Couples typically find that it is most advantageous to file jointly. However, there are many good reasons to file separately, as well. You should speak with a tax professional if you think some of those reasons might apply to you.
It’s usually favorable to file as Married Filing Separately if the spouse with a smaller income paid most of their medical bills. When you itemize and file separately, you can claim the medical expenses on one spouse’s taxes. You may not be able to deduct medical expenses or the expenses may be limited to a smaller amount when you file jointly.
There are also tax implications to consider after marrying a non-US citizen, especially when it comes to your filing status choice. In most cases, a marriage in a foreign country is valid for US federal income tax purposes. And if the noncitizen spouse is a green card holder or meets the substantial presence test, then the spouse is a resident and is generally treated the same as a citizen for tax purposes. This is true no matter where they live. However, a green card holder would maintain resident status abroad, but a visa holder who met the substantial presence test would lose resident status when they left the US. Your filing status on your income tax return should be carefully considered when marrying a non-US citizen.
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Health insurance affidavit
In the context of common-law marriage, an affidavit is a legal document that establishes a couple as married in the eyes of the law and various institutions, including insurance providers. In the case of health insurance, an affidavit of common-law marriage is often required to include a partner on one's insurance plan. While the criteria for common-law marriage vary by state, it typically involves an agreement between two people to be married, cohabitation, and holding themselves out to the public as a married couple.
The significance of signing an affidavit of common-law marriage is that it confers the same legal recognition as a traditional marriage certificate. This has implications for tax filing status, insurance coverage, and, in the event of a split, the divorce process. It is important to understand that common-law marriage is a legally binding union, and ending it requires the same legal procedures as a conventional marriage.
H&R Block, a tax services company, advises that tax filing status is determined based on an individual's situation as of the last day of the year. For couples living together in a common-law marriage recognised by their state, they are considered married for tax filing purposes. This allows them to choose between filing jointly or separately, with joint filing often offering more advantages.
However, it is crucial to note that accepting a premium tax credit under the Affordable Care Act necessitates filing jointly to receive the credit. Additionally, changes in marital status should be communicated to the Social Security Administration (SSA) and reflected in Form W-4 with the employer to ensure accurate tax filings.
While H&R Block does not provide specific details on determining common-law marriage, the process generally involves evaluating factors such as cohabitation, holding themselves out as a married couple, and meeting the criteria recognised by the relevant state. Seeking legal advice or consulting with a tax professional can help clarify the specific requirements and implications of common-law marriage in different states.
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Common-law marriage and tax credits
In the US, a common-law marriage is a legally recognised marriage between two people who have lived together for a certain period and hold themselves out to the public as being married. The exact requirements vary by state, but generally, a couple must agree to be married and cohabitate to establish a common-law marriage. H&R Block considers a couple married for tax purposes if they are living together in a common-law marriage recognised by the state they live in or the state where the common-law marriage began.
Tax Benefits of Common-Law Marriage
Common-law marriages are generally afforded the same tax benefits as traditional marriages. These benefits include:
- A lower tax rate when filing jointly
- The ability to claim education tax credits if either spouse was a student
- The ability to deduct student loan interest
- The ability to claim credits for children and childcare expenses
- The ability to claim the Earned Income Tax Credit, if eligible
Tax Credits and Changes in Marital Status
A change in marital status, including entering into a common-law marriage, can affect the tax credits and benefits that can be claimed on a tax return. For example, in Canada, the Canada Revenue Agency (CRA) and Revenu Québec require individuals to notify them of a change in marital status by the end of the month following the change. This helps individuals maximise their claims and prevent incorrect claims that may result in repayment.
Additionally, in the US, if a couple has children together, they are considered common-law as soon as they begin living together. This may impact their eligibility for certain tax credits, such as the Child Tax Credit and the Child and Dependent Care Credit.
Common-Law Marriage and Tax Filing
When filing taxes, common-law couples may choose to file jointly or separately, depending on their specific circumstances. However, it is important to note that in some cases, couples who have accepted a premium tax credit under the Affordable Care Act must file jointly to receive the credit.
In conclusion, common-law marriages are generally recognised for tax purposes and offer similar tax benefits to traditional marriages. However, it is important to understand the specific requirements and implications for tax credits when entering into a common-law marriage or experiencing a change in marital status.
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Common-law marriage and foreign spouses
The concept of common-law marriage differs across the world. In the US, common-law marriage is recognised in Colorado, Iowa, Kansas, Montana, Rhode Island, Texas, Utah, Oklahoma and the District of Columbia. In these states, couples in common-law marriages are considered legally married for all purposes and in all circumstances. All US jurisdictions recognise common-law marriages that were validly contracted in the originating jurisdiction. However, it can be difficult to prove a common-law marriage, as it is not enough for the couple to have lived together for several years. They must have been generally regarded as husband and wife by their community, and neither party could have been married to someone else when the relationship began.
In the UK, the term "common-law marriage" is used to refer to unmarried, cohabiting heterosexual couples. However, this is merely a social usage, and it does not confer any of the rights or obligations of a legally recognised marriage. Similarly, in Canada, while some provinces may extend to couples in marriage-like relationships many of the rights and responsibilities of a marriage, they are not legally considered married.
When it comes to foreign spouses, the validity of a marriage is determined by the place-of-celebration rule. This means that officers will review the laws of the jurisdiction in which the marriage took place to determine if the jurisdiction recognises such marriages. For example, some couples choose to have a destination wedding and get legally married in their home country to avoid the complexity of complying with local laws.
In the context of naturalisation in the US, an officer should review the laws of the relevant jurisdiction on common-law marriages to determine whether the applicant and spouse should be considered married for naturalisation purposes. The applicant's spouse must be and remain a US citizen from the time of filing until the applicant takes the Oath of Allegiance.
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Frequently asked questions
H&R Block determines common-law marriage by whether the couple is recognized as such by the state they live in or the state where the common-law marriage began.
A common-law marriage is considered a marriage for tax purposes. This means that you can file taxes jointly, which often results in a lower tax rate. However, there may be credits and deductions that you are no longer eligible for.
Common-law marriage is established by having an agreement to be married and cohabitating. There is no requirement for a specific amount of time cohabitating, and the agreement does not need to be written down. Evidence of a common-law marriage includes filing taxes jointly and having health insurance together.
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