Why does the government let two people living together as a couple with children file as if they are living as individuals and in poverty? I realize there is no filing status for cohabitating, but maybe there ought to be, because these couples are filing separate and making it look like they are living in poverty, when in fact when you combine the two incomes they are above proverty. Can anyone please tell me why the government would allow this?

There's the determination of the Filing Status, which depends on whether the state the couple is living in considers it "common law". One of them can file Head of Household.
See here:Filing Status

Filing Status
You must determine your filing status before you can determine your filing requirements, standard deduction (discussed later), and correct tax. You figure your correct tax by using the section of the Tax Computation Worksheet or the column in the Tax Table that applies to your filing status.

You also use your filing status in determining whether you are eligible to claim certain other deductions and credits.

There are five filing statuses:

Single,

Married Filing Jointly,

Married Filing Separately,

Head of Household, and

Qualifying Widow(er) With Dependent Child.

If more than one filing status applies to you, choose the one that will give you the lowest tax.

Marital Status
In general, your filing status depends on whether you are considered unmarried or married. For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife.

Unmarried persons. You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree.

State law governs whether you are married or legally separated under a divorce or separate maintenance decree.

Just as a side note: I'm a single parent, my son is over 17. My son and I work, we file our own returns. So, when your kids grow up, it's a whole different ball game, that's when it gets harder. So be ready for it. No more EIC's then, unless they can go to college.

I'm living with someone whose disabled, and I will not be getting married to him. It's my choice.I am the only one bringing home the bacon.I will not get married just so I can claimed married. It doesn't work that way.I don't want that hanging over my head. A marriage is a legal bond, which means you take on both parties responsibilites. Of course, there's this thing called love, honor, and trust too.
So, it's all not as easy as it seems. I count my blessings and do not worry about things that I can't change.

Even though the government uses the tax system to influence (encourage) certain kinds of behavior, there's no way it can micromanage your life through a tax code.

Congress has allowed benefits for married people that it won't allow for single people, and the benefits are based ONLY on whether you have a legal status of being married.

People will find infinite ways of living together or seperate and there will always be the appearance that the government allows a benefit to one way and not another. The government actually has nothing to do with it--Congress just isn't that effective in controlling us.