Marriage Equality Doesn’t Equal Tax Equality For Gay Couples
March 1, 2012 1 Comment
Thanks to the discriminatory Defense of Marriage Act (DOMA), even if gay couples reside in a state that allows same-sex marriage, they won’t be getting the same tax benefits afforded to their straight counterparts.
“Take a married gay couple with two children, for example. If they claim two dependents, have combined salaries of $100,000, and one of them files as a head of household and has the partner on an employer-supplied health-insurance plan at a cost of $5,000, the couple’s tax liability will total $15,199, compared with $10,656 for a married heterosexual couple with two children, the same income and the same health insurance who file jointly on a single tax return,” reports the Orlando Sentinel.
The benefits afforded to straight couples don’t stop just there either, in fact it follows them all the way to the grave. “By default, assets left behind by a husband or wife who dies are absorbed by the surviving spouse tax-free. But when one of two same-sex partners dies, the surviving partner must pay taxes on the assets above a certain exempt amount,” reports the newspaper.
“Retirement funds encounter a similar situation. In the case of a legal, heterosexual marriage, the individual retirement account of a deceased partner automatically becomes the property of the surviving spouse, who has the option of deferring payments from the account until he or she is 70 1/2 years old. But in a same-sex partnership, the non-spouse beneficiary must start withdrawals immediately, missing out on interest that could have accumulated if the account had remained untouched.”
According to NOLO.com there are many other benefits as well, including:
Social Security Benefits: Married heterosexual couples get a big financial boost from certain Social Security benefit programs that do not apply to same-sex couples. For some gay and lesbian partners, the denial of these benefits can mean spending later years in poverty.
Life estate trusts: Heterosexual married couples can create life estate trusts, including QTIP trusts and QDOT trusts, which provide distinct tax advantages upon the death of one spouse. For example, the QTIP trust allows surviving spouses to use trust property tax-free in certain circumstances. The QDOT trust allows a non-U.S. citizen surviving spouses to postpone paying any estate taxes above the exemption amount.
Veteran and Military Benefits: The heterosexual spouses of deceased veterans are entitled to a myriad of benefits, including health care, death pensions, educational assistance, home loan guarantees, vocational training, and bereavement counseling.
Federal Employment Benefits: More than 22 million Americans are employed by the federal government. Many of the employment benefits that the federal government provides to its employees and their families are tied to marriage status.
Immigration Benefits: Many immigration benefits are tied to marital status. For example, a non-U.S. citizen may obtain legal residency, and later citizenship status, when married to a U.S. citizen. Non-U.S. citizens who are in same-sex marriages or partnerships are not entitled to this benefit. This is true even if the couple has a valid marriage certificate from a country that allows same-sex marriages.
NOLO offers a complete Legal Guide for Lesbian & Gay Couples, which includes, “information on protecting your same-sex relationship under the law, including how to leave property to one another, make health care decisions for each other, and take care of finances.”