To Join or Not to Join, That is The Question

Married couples-to-be and newlyweds are always asking me if it’s beneficial to join or not to join their accounts.

Image shows a long table with multiple guests celebrating at a wedding reception.
April 29th, 2018
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Since June is right around the corner and it’s a popular month for weddings I thought this would be a good time to bring up this topic. The saying is “til death do us part”, but these days it doesn’t always include combined household accounts. When my parents got married, they were expected to join bank accounts, share credit cards and have the title of their home under both their names. But nowadays, as people get married older or for a second time after divorce, many couples are choosing to keep their accounts separate.

Married couples-to-be and newlyweds are always asking me if it’s beneficial to join or not to join their accounts. The answer depends on a couple’s established finances, how much trust they have in each other and whether their spending habits are compatible.

For those of you thinking about what to do, here are some options:

  • MERGE ACCOUNTS – Couples who are either starting off their careers or who don’t have much savings, usually have no hesitation in joining accounts, buying a home together or opening a credit card in both their names. Turns out when you don’t have much at stake, you’re more willing to take a chance. Couples with established finances may trust each other and have compatible spending habits, but may find it more of an inconvenience to merge their finances initially. However, sharing bank accounts and credit cards can eliminate confusion and be more convenient in the long run because you won’t have to worry about who pays for what.
  • KEEP THINGS COMPLETELY SEPARATE – Some people say keeping your finances completely separate after marriage means a couple doesn’t trust each other. But many couples who have established bank accounts, credit cards and even their own homes, find that keeping things separate after marriage is most convenient. If you do keep your finances separate, you will have to decide who pays what bill each month and make sure payments are made on time.
  • JOINT AND SEPARATE -Some couples do not fully merge their accounts, but rather create joint accounts and keep separate ones for their own personal spending. Many couples say this gives them some financial freedom, but alleviates the bill paying because all bills are paid from the joint account. The only dilemma with the joint and separate account choice is if you and your spouse don’t make the same amount of money. In this case, you’ll have to decide how much each person will contribute to the joint accounts and if both parties are okay with the agreement.
  • TAX IMPLICATIONS – Married taxpayers have a choice to file a joint tax return or to have a Married Filing Separately status. I usually advise couples to file jointly. That’s because couples who file as Married Filing Separately are not eligible to claim tuition and fee deductions, student loan interest deductions, credits for the elderly and disabled, Child and Dependent Care Credit and Earned Income Credit. The biggest benefit of filing separately is that by filing a separate return, a taxpayer is only responsible for payment of their separate return, payment of tax and any additional tax as a result of an audit.

Money is one of the top reasons people get divorced. That’s why it’s important to discuss your finances and how you plan to handle them before you get married and at least once a month with your spouse. Please reach out to us if you want to discuss the tax implications of keeping separate accounts and your tax filing status.

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