Tuesday, April 1, 2008

Protections and Benefits of Marriage #5, #6, and #7: Income Taxes

Want to know another way same-sex couples are tangibly and specifically harmed by unequal marriage rights? Taxes.

They have increased complexity and higher fees when filing tax returns (#5), when compared to opposite-sex married couples.

As Law Professor Anthony Infanti writes,

"Because many states use the federal income tax as a base for their own income taxes and the federal government does not recognize same-sex relationships, same-sex couples in legally recognized relationships cannot simply use their federal returns as a basis for their state filings (as different-sex married couples can). As a practical matter, then, this usually means that the same-sex couple has to prepare two separate “single” federal returns to file with the federal government and then a mock “joint” federal return to use as a basis for completing their joint state return....

A Connecticut couple that had entered into a civil union was completing their tax returns online using the H&R Block web site when the following message popped up: “We don’t support Connecticut Civil Union returns.” At the most immediate level, H&R Block could have put a bit more thought into how best to phrase the message that this was a software issue. After all, the story implies that the Connecticut couple initially took the statement to represent H&R Block’s position on the propriety of legally recognizing same-sex relationships in Connecticut). More troubling, however, is the fact that the couple was told by H&R Block that it was willing to prepare the return in one of its offices—but at a price of about $200, which is $155 more than the online price for preparing returns."

In addition to this added layer of complexity, several unfair provisions in the tax code exist in relation to same-sex couples.

With regard to health insurance and "domestic partnership" benefits (#6) provided by an employer, as Gay & Lesbian Advocates and Defenders explains:

"When an employer provides a benefit, like health insurance, to an employee’s different-sex spouse, the benefit is excluded from gross income tax federally. That means that an employer may provide tax-free health benefits to an employee’s different-sex spouse. However, when an employer extends a benefit to an employee’s same-sex spouse, the employee will be taxed federally on the fair market value of the benefit provided to his or her same-sex spouse. The value of the benefit will be treated as wages paid to the employee for federal employment tax purposes."

These federal tax injustices show how state marriage benefits and civil unions are not adequate for same-sex couples, thanks (once again) to DOMA. For purposes of all federal benefits and protections, same-sex couples, even those who are legally married in their state, are legal strangers.

Fellow gay readers, how do you like paying more taxes for a government that says your families are less equal than other families?

Oh, but there's more! Coming soon to a blog near you: inheritance tax unfairness.


[Addendum: Commenter John brought up another relevant tax point. Opposite-sex married couples are able file jointly or separately, whichever is more financially advantageous. Same-sex couples may only file separately (#7). Generally, filing jointly offers more tax savings. That being said, it does depend on the circumstances. The unfairness lies in the fact that same-sex couples are not even given the option to file in the way that is potentially more advantageous to them.]

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