Comments on: Reader Question: Finances for a Married Couple http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm Building Wealth through Saving and Investing Sat, 21 Nov 2009 03:00:37 -0500 http://wordpress.org/?v=abc hourly 1 By: Neil http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-106461 Neil Wed, 21 Oct 2009 22:36:44 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-106461 Advice based on "higher income earner" is often moot to my generation. My wife and I have incomes in the same tax bracket, and regularly swap position for top earner, depending on who most recently got a raise. We do manage everything in a joint account, because our experiment with separate accounts usually lead to hard feelings that one person (me) was always on the hook for unusual expenses...the balancing act was also challenging, since this was early in our relationship when we had little-to-no savings. Even now, though, virtually all of our investments are in tax shelters (TFSA or RRSP), and our excess cash that can't be sheltered goes to paying down the mortgage. It's hard to see a downside to our joint accounts. Advice based on “higher income earner” is often moot to my generation. My wife and I have incomes in the same tax bracket, and regularly swap position for top earner, depending on who most recently got a raise.

We do manage everything in a joint account, because our experiment with separate accounts usually lead to hard feelings that one person (me) was always on the hook for unusual expenses…the balancing act was also challenging, since this was early in our relationship when we had little-to-no savings.

Even now, though, virtually all of our investments are in tax shelters (TFSA or RRSP), and our excess cash that can’t be sheltered goes to paying down the mortgage. It’s hard to see a downside to our joint accounts.

]]> By: paulette http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-36017 paulette Sun, 18 May 2008 01:45:07 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-36017 Its sounds good for the tax. Although i have doubts of applying this to those couples who are not really in good terms:) Its sounds good for the tax. Although i have doubts of applying this to those couples who are not really in good terms:)

]]> By: David http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5239 David Fri, 25 May 2007 01:36:45 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5239 Separate accounts, with a joint account for household expenses. I've always chosen to do it that way. It makes keeping a paper trail much simpler, and protects you from the spending habits of your partner. Rememeber not all couples are, or remain true to their goals. I have heard too many tales where an account has un-discussed expenditures, which can lead to a very rocky relationship. David Separate accounts, with a joint account for household expenses. I’ve always chosen to do it that way. It makes keeping a paper trail much simpler, and protects you from the spending habits of your partner. Rememeber not all couples are, or remain true to their goals. I have heard too many tales where an account has un-discussed expenditures, which can lead to a very rocky relationship.

David

]]> By: florch http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5208 florch Thu, 24 May 2007 09:49:33 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5208 Good eye opener...we've always had everything together where possible - (RRSP's the obvious exception). Would the Smith Maneuver be an exception where the higher earner would want to own the investment and therefore the tax deduction? Also (although I know rules change) would any of this be affected by the new income splitting rules in retirement? Good eye opener…we’ve always had everything together where possible – (RRSP’s the obvious exception). Would the Smith Maneuver be an exception where the higher earner would want to own the investment and therefore the tax deduction?

Also (although I know rules change) would any of this be affected by the new income splitting rules in retirement?

]]> By: Brenna http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5200 Brenna Thu, 24 May 2007 06:26:44 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5200 My husband and I have our own separate bank and IRA accounts and joint household, wealth and other savings accounts. We use quicken and keep all of our investments accounted for. When it comes to tax time; we let the CPA file for us. We still have our separate credit cards and the one duplicate card we have - I don't use it at all. My husband just authorizes me on two of his cards. My husband and I have our own separate bank and IRA accounts and joint household, wealth and other savings accounts. We use quicken and keep all of our investments accounted for. When it comes to tax time; we let the CPA file for us. We still have our separate credit cards and the one duplicate card we have – I don’t use it at all. My husband just authorizes me on two of his cards.

]]> By: Canadian Money Blog Reviewers http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5120 Canadian Money Blog Reviewers Wed, 23 May 2007 18:24:54 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5120 FT: probably the "safest approach indeed" FJ and CD: I am glad to hear that.. will be less trouble. I guess if I don't invest more than my spouse's net income in her investment account, CRA can't really say anything. I'll probably ask an accountant to be sure. FT: probably the “safest approach indeed”

FJ and CD: I am glad to hear that.. will be less trouble. I guess if I don’t invest more than my spouse’s net income in her investment account, CRA can’t really say anything. I’ll probably ask an accountant to be sure.

]]> By: Canadian Dream http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5112 Canadian Dream Wed, 23 May 2007 18:06:18 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5112 I handle things similar to FJ. One joint account the everything goes into and then from there it is moved around to the separate investment accounts. I handle things similar to FJ. One joint account the everything goes into and then from there it is moved around to the separate investment accounts.

]]> By: FinancialJungle.com http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5109 FinancialJungle.com Wed, 23 May 2007 16:07:33 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5109 I have a joint account with my wife just so we can consolidate our incomes and expenses. However, we do have separate trading accounts with similar balances. As for tax saving, I allocate tax-heavy investments under her name. These include income trusts and high interest savings. I have a joint account with my wife just so we can consolidate our incomes and expenses. However, we do have separate trading accounts with similar balances. As for tax saving, I allocate tax-heavy investments under her name. These include income trusts and high interest savings.

]]> By: Kevin Beitel http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5106 Kevin Beitel Wed, 23 May 2007 13:01:38 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5106 Sorry, I meant surplus revenues not... surplus reviews. Sorry, I meant surplus revenues not… surplus reviews.

]]> By: Kevin Beitel http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5105 Kevin Beitel Wed, 23 May 2007 13:00:02 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5105 Speaking of Mishmashed... Ever wonder why our politicians take surplus reviews generated through taxation and throw it into general revenues? It makes it easier to hide it from the Governor General auditing... Speaking of Mishmashed… Ever wonder why our politicians take surplus reviews generated through taxation and throw it into general revenues? It makes it easier to hide it from the Governor General auditing…

]]> By: FrugalTrader http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5103 FrugalTrader Wed, 23 May 2007 12:42:55 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5103 Hey CMBR, it is difficult to track who is doing the investing if all the funds are mishmashed. If I were you, I would open a separate account for your spouse (PCF or something) and use that account to fund your investing activities. It could get messy if you are audited. Hey CMBR, it is difficult to track who is doing the investing if all the funds are mishmashed. If I were you, I would open a separate account for your spouse (PCF or something) and use that account to fund your investing activities. It could get messy if you are audited.

]]> By: Canadian Money Blogs Reviewer http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5102 Canadian Money Blogs Reviewer Wed, 23 May 2007 12:33:39 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5102 FT: if we have a joint bank account but different trading accounts, is there no way for my spouse to do all the investing even if we don't have the different bank accounts paper trail? FT: if we have a joint bank account but different trading accounts, is there no way for my spouse to do all the investing even if we don’t have the different bank accounts paper trail?

]]> By: FrugalTrader http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5095 FrugalTrader Wed, 23 May 2007 11:24:05 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5095 Hey SavingsJourney! What a great tip! Thanks! Hey SavingsJourney! What a great tip! Thanks!

]]> By: SavingsJourney http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm/comment-page-1#comment-5089 SavingsJourney Wed, 23 May 2007 11:10:53 +0000 http://www.milliondollarjourney.com/reader-question-finances-for-a-married-couple.htm#comment-5089 Hi MDJ, there's a great little personal tax book from KPMG called "Tax Planning For You and Your Family" that I have that <a href="http://savingsjourney.blogspot.com/2007/04/tax-planning-for-you-and-your-family.html" rel="nofollow">I blogged about</a>. In the most recent edition, they also recommend what you've indicated. There are quite a few other useful things you can get out of that book, particularly if your marginal tax rate is significantly different from your spouse's. One thing that you can do is pay your spouse's income taxes at tax time if you're the higher marginal tax rate income earner. If your spouse can have their employer defer all taxes, then your spouse is receiving their full gross pay. At income tax time, the higher income earner uses their saved money to pay their spouse's income taxes. This is not considered attribution because the higher income earner is paying the income taxes by writing a cheque to the government directly. This frees up more of the lower income earner's money for investing, and therefore a lower tax rate on interest, dividends, and capital gains is applied. Hi MDJ, there’s a great little personal tax book from KPMG called “Tax Planning For You and Your Family” that I have that I blogged about.

In the most recent edition, they also recommend what you’ve indicated. There are quite a few other useful things you can get out of that book, particularly if your marginal tax rate is significantly different from your spouse’s.

One thing that you can do is pay your spouse’s income taxes at tax time if you’re the higher marginal tax rate income earner. If your spouse can have their employer defer all taxes, then your spouse is receiving their full gross pay.

At income tax time, the higher income earner uses their saved money to pay their spouse’s income taxes. This is not considered attribution because the higher income earner is paying the income taxes by writing a cheque to the government directly. This frees up more of the lower income earner’s money for investing, and therefore a lower tax rate on interest, dividends, and capital gains is applied.

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