Tax tips for same-sex couples

Posted on 23 Feb 2010 at 8:05am

Some of the special rights that heterosexual couples enjoy have to do with taxes. But depending on circumstances, gay and lesbian couples who marry may run into the “marriage penalty.”

Tax law was designed for June and Ward Cleaver. Dad is the breadwinner. Mom stays home and raises the kids. If she does have a job, she earns a lot less. The marriage penalty happens when both partners earn about the same amount. So if both partners are equal contributors, monetarily speaking, they’re better off unmarried for income tax purposes.

If a couple has children, a married couple takes a deduction on their joint tax form. Gay or lesbian couples with joint custody cannot. However, the deduction may have a larger impact on one tax form than on the other and either may take the deduction. Check with an accountant.

If you took advantage of the $8,000 tax credit to buy a new home, that credit must be split. The IRS has issued guidelines on that for “single” people who have purchased property with other “single” people.

The IRS allows a single person to file as “head of household” if that person has contributed more than other members of the household toward upkeep. Because of deductions, tax rates may be lower for head of household. Check with an accountant.

Gift tax is another way a couple may lower income. While a married couple can give each other an unlimited amount of money, a gay or lesbian couple cannot. However, untaxed gifts may be given to anyone up to $13,000 per year. But a wife giving money to her husband doesn’t lower anything, since they file jointly. But since a gay or lesbian couples file separate tax forms, this may affect tax rates. Check with an accountant.

Personally, I have taken advantage of Texas homestead laws when the state would not recognize my relationship. A married couple can homestead only one, primary home.

We figured screw that. One of us homesteaded our house in Dallas. The other homesteaded the house on Cedar Creek Lake. The additional advantage was lower car insurance rates in Henderson County. We were at the lake enough that you couldn’t prove one home or the other was the primary residence. (Unintended consequences were voting and jury duty in Henderson County as well)

If gay and lesbian relationships are not going to be recognized, take advantage of the discrimination when possible. The state can’t have it both ways. If they don’t like the few advantages, fix the inequity.

And, of course, the accountant needed to figure out how to take advantage of this intentional and deliberate discrimination and the cost of preparing two, rather than just one, form is fully tax deductible.

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