Accumulating debt before marriage is generally advisable to steer clear of
Chatty Finance Guide:
Q: Hey Liz, my fiance hasn't filed taxes for several years and now we're getting hitched. How do we sort this out? If there's a big debt, could the IRS come after me?
A: Oof! Tough spot, buddy. You wanna keep this situation from spilling over onto your blissful future, right? Here's the deal:
Marriage doesn't automatically make your fiancé's past tax debts yours, but you'll still want to tread carefully. Living together or owning joint assets might make things tricky. Community property states, for example, may force you both to split debts.
The IRS isn't kidding around, either. They've got powers like seizing refunds, your paycheck, and property. Remember, ignorance ain't always bliss here. It's best to work with a tax pro to get those long-overdue returns in asap. The IRS even offers payment plans if you can't pay in full.
Q: Hey Liz, I'm an 82-year-old widow with a struggling daughter and debt piling up. My income disappears in payment of credit cards and personal loans. I need advice - bankruptcy, loan consolidation, or something else?
A: Grab your walking cane and let me hold your hand through this, dear. Your situation's grim, no question about that. Bankruptcy might be the best option for you here. It could erase your debt, protect your minimal assets, and lift a huge weight off your shoulders.
Of course, there are other methods to tackle debt, like debt management plans, debt settlement, or consolidation loans. But, given your dire circumstances, bankruptcy seems the most suitable. Consult a bankruptcy attorney ASAP.
Q: Hey Liz, I heard starting RMDs from my retirement plans reduces my Social Security payment. Is that true?
A: Well, dip your toes back in the pool, because that's not exactly how it goes. Your retirement withdrawals won't affect Social Security directly. But, the extra income might make more of your Social Security taxable (remember combined income?).
Tax on Social Security is based on a mix of your Adjusted Gross Income, nontaxable interest, and half of your Social Security income. Depending on your total income, a portion of your benefit could become taxable.
Don't let the taxman suck away your Social Security entirely, though. Only a portion, if any, of your benefit gets taxed. This doesn't mean the tax liability disappears entirely either. Instead, it indicates the portion of your benefit that might be subject to your income tax bracket.
Liz Weston, a Financial Planning whiz, can help with your finicky monetary problems. Fire away your queries at her lair lizweston.com using the contact form.
More Thrilling Reads:
### Heed This: Credit card debt doesn't vanish upon your demise### In a pickle? What to do when can't pay your taxes### Ch-ch-Changes? Gird yourself for a tidal wave of paperwork
If you're getting married and your partner has a history of unpaid taxes, it's important to seek professional help to sort out the past debts and minimize the potential impact on your joint assets.For seniors struggling with debt, considering options like bankruptcy and debt management plans might be necessary, but it's best to consult a bankruptcy attorney for tailored advice.*Starting Required Minimum Distributions (RMDs) from retirement plans does not directly affect Social Security payments, but it could increase the taxable portion of your Social Security income due to combined income rules.
