Tax Time Deliberation: Married or Not?

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As married, heterosexual couples across America pull out their tax forms in the last minute rush to file by April 14th at seconds before midnight, same-sex couples are slapped in the face one more time with their second-class citizenship.

No one enjoys tax time in this country. We have a long, complicated and intricate tax code that requires a degree to fully understand. What form do you use? Which box do you check? What are legal deductions and can you count the gift to your mailman as a charitable contribution?

"Certainty? In this world nothing is certain but death and taxes," Benjamin Franklin famously said.

For same-sex couples, however, there is an additional layer not only of confusion but also of denied rights. Are we married or aren't we? I live in Massachusetts. I'm married but only in this state. I must file separately to the federal government. On the federal form, do we divide the dependents between us? Do I get two of the kids and my wife one? Or does it make sense for her to claim all three? Who gets the mortgage interest deduction?

It was easy for Franklin to be so certain. He wasn't a gay man married in Massachusetts in the last four years.

HRC has launched a campaign, "7 Days to A Better Financial You," to highlight the "significant financial burdens and legal hurdles" for same-sex couples and their families. Our social security benefits are not transferable. Life insurance must be carefully designed. Inheritance of any kind is out of the question without a significant tax burden.

The list goes on and on. Same-sex couples are urged to get sound tax and legal advice. Julie Goodridge, of NorthStar Asset Management, Inc. a firm that balances clients' social and political concerns with their financial objectives, advises her same-sex clients to be prepared on as many levels as possible. "Gay and Lesbian couples need elaborate documentation around their relationships and children- health care proxies, powers of attorney- in order to ensure basic financial health. Even in Massachusetts."

Heterosexuals get to say, "I do." All done. No additional legal work required, if a spouse dies, everything is transferred without tax or question. You check the "married" box. The government definition of their marriage is powerful insurance.

How many people filing the basic 1040E tax form have the resources and financial ability to hire a LGBT issue savvy attorney, consult a tax accountant, and write up a series of documents? How many people understand the new provisions of the Pension Protection Act of 2006? Or how to offset the tax burden of domestic partner health insurance?

Goodridge adds, "There are significant additional costs in planning for estates and even then there are no guarantees their family of origin will not legally challenge their final wishes."

Great. After spending a bunch of additional dollars, you still might end up buried next to Aunt Martha and your partner thrown out of the home you bought together.

I'm not talking about a revolution. I'm not trying to give reason for a swarm of locusts to descend. I'm married, I live in Massachusetts and I want to file my taxes.

Sometime before midnight on April 14th.

Comments

[WilliePilgrim]

Just another reason why we should find another way to fund our government. No doubt to an organizational obsessive the IRS's tax code seems like a great way to do it, but in the practical sense it requires a beaurocracy to determine every citizen to report and conform, which most of us find disgusting. At first it was made palatable by being relatively innocuous but as we can all see it's inculcated itself into our culture and the baseline of freedom and liberty has slid considerably into the direction of tyrany. So, is there a solution? There are those who will say that there is no fairer system. Those are typically either tax accountants or those who hire them. As for the rest of us? Take the wool away from your eyes and try not to weep.

[SonofLiberty1]

Life is tough isn't it?
Quit whining lady, you think you have it bad.
I think it's time for...

STRAIGHT BACHELOR RIGHTS!

[itmaybetoolate]

Lucky for us the two presidential candidates are on top of this! Not! Obama endorses a state-by-state separate but equal civil union with equivalent (?) benefits. Who will decide what is equivalent in each state? It seems ironic that Obama pushes states rights on this issue - is he aware that "states rights" was used to fight civil rights legislation?

Clinton - well, at least she is making some direct effort to reach out to the community although her stance on same-sex marriage is less clear to me. She is from the DOMA crowd. And, neither one has done a thing about ENDA.

I say same-sex couples should start looking for ways to benefit financially from their status.

[robinhood1]

The system is unfair to gay people. So what else is new? If it really bothers you, move to Canada, where gay marriage is recognized across the country, but taxes tend to be a lot higher especially for successful people. In the meantime, take advantage of the tax breaks that are available to other single people (and to married couples), such tax free municipal bonds, contributions to a 401K plan or an IRA plan, or both etc. The Bush tax cuts actually benefited gay taxpayers more than straight ones, since gay couples, as you noted, can never file joint Federal returns and as a result, tend to be in higher tax brackets than their married colleagues who have similar incomes and stay at home spouses. If the Democrats control the White House, the House and the Senate in 2009, gay rights may be expanded, but I'd bet on tax rates going up first. You may end up worse than before, not being able to file a joint return and having your taxable income taxed at higher rates. By the way, Canada does not allow joint returns for married couples, gay or straight and there is no mortgage interest deduction either.

[itmaybetoolate]

Why do people say "if it bothers you, move out of the country?" As if that is an option? Who can afford the emotional and financial costs of moving your life to another f**king country!? And why should any amurican citizen have to move to another country to gain access to "life, liberty and the pursuit of happiness?" Doesn't amurica have the capacity to provide equality for ALL people? Why are amuricans such selfish, greedy pr***s?!

[truthskr]

HuffPost's Pick

Continued...

The problem with HSAs is that, even if your employer allows for domestic partner coverage, that domestic partners can NOT access the employee's HSA account to cover any deductible-eligible medical treatment because those funds are by law pre-tax, and all domestic partner health benefits (premiums, deductibles, etc) must be paid with post-tax dollars because the federal government does not recognize the relationship, and certainly not for tax treatment purposes.

I don't have any suggested solutions to this problem (unless you have a doctor's office willing to look the other way and are willing to take the risk involved in paying for your domestic partner's medical costs with your HSA) just thought I would add it to the laundry list of taxation issues facing gay couples.

Full disclosure: I am a lesbian, have been with my partner for 15 years, I work in pension consulting so I am one of the rare individuals who understands PPA-2006, and I am very familiar with the loopholes that we as gays may *try* to exercise in order to try the make the tax reporting process slightly less discriminatory.

[truthskr]

Another taxation issue surrounding domestic partner health insurance:

Health Spending Accounts. I hate them. Not only are they an administrative nightmare for anyone (gay, straight, whatever) trying to use them, they are just yet another financial "tool" that completely financially discriminates against non-married (particularly gay) couples. If anyone reading this is not familiar with HSAs, mark my words, you will be. Barring a health care overhaul in this country, HSAs will be the plans of the future as both employers and insurers attempt to shift more and more of the burden onto the consumer. "Consumer directed healthcare" is a term often applied to HSA Plans, but basically it means that you are "redirected" into a high-deductible Plan (the deductible of which is usually in the $1500-$5000 range a year) with generally no reduction in premiums, and the burden of this deductible is now paid for by the plan participant(s) in the form of HSAs, which are just accounts that participants contribution their own pre-tax money to in order to meet their deductible costs year to year.

[standforpeace]

Great post. People who oppose full marriage rights for gays and lesbians have been pretty successful in making this into an argument about "lifestyle" choices, the right of religious institutions to decide what marriages they will sanction, or most egregious of all the protection of marriage from those whose participation will somehow demean the institution itself. Those who know better need to continue to assert the basic principle of human equality involved in state recognition of all families. Also advocates for marriage rights need to do more to frame this as an issue of economic fairness that has its biggest economic impact on working class gays and lesbians who are hurt the most when partners can't include them in health insurance and social security benefits, transfer property titles without huge fees, and file joint tax returns among other benefits.

[Absintheforall]

If 2 people got married in, say, the old Soviet Union in a civil ceremony and then emigrated to the USA, they would still be deemed married. No? If that's the case, can you apply it to yourselves being legally married in Massachusetts? After all, MA is one state of 50 comprising the USA. You are deemed married in MA, so how could you not be legally married in the USA? Isn't marriage a State right to perform? I've never heard of anyone being REQUIRED to be married in a Federal civil service.

States Rights over Federal Rights, anybody?

[RedBirdy]

I'm gay, I live in PA, and don't have the right to marry my partner. We live together, we share expenses, and soon will have a child. Tax time sucks for us too. I understand. Trust me, I understand. But you might want to prepare yourself for the attacks that may come your way, from people who may not understand what it's like. A heterosexual couple, unmarried, or even common law may want to explain who they share the same issues, but at the end of the day, if they wanted to marry, and have legal ties to one another they can do so without and advocate attorney and accountant.