USA: Three Reasons Gays May Love IRS Equality

Written by scott on September 2nd, 2013

Taxes and LGBT CouplesYesterday, the Motley Fool brought us three reasons to hate the IRS’s new equal treatment of same-sex couples. Today they have three reasons to like it.

The Motley Fool reports:

In June, the Supreme Court struck down provisions of the Defense of Marriage Act denying same-sex couples federal recognition of their marital status. Yet for those in same-sex marriages, the tax impact of the Supreme Court ruling remained unclear, as the IRS said it would have to work with the Treasury Department and other government agencies to provide future guidance. Same-sex spouses got that guidance earlier this week, with Treasury Secretary Jack Lew announcing that the IRS would recognize same-sex marriages for federal tax purposes regardless of their state of residence. Let’s take a look at some of the implications of the new IRS policy with an eye toward the elements that same-sex spouses will benefit from the most.

1. Same-sex spouses with unequal incomes are likely to get a marriage bonus.
Federal tax law treats married couples differently from single filers. Although you might think that it would be appropriate for items like tax brackets, standard deductions, and income threshold limits for married couples simply to be double the corresponding amounts for single filers, the actual numbers are a lot more complicated. In general, couples in which one person earns the bulk of the income are most likely to reduce their overall tax burden by getting married, and the IRS ruling will allow same-sex spouses in that situation to do so. With many different factors to consider, including the Earned Income Tax Credit, the Alternative Minimum Tax, and other more specialized deductions and credits, it’s hard to make valid generalizations, but many same-sex spouses will benefit from the change in filing status.

Hit the link above for the other two reasons. So it’s not all doom and gloom.

Find more articles and gay wedding resources.

 

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