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USA: Three Reasons Gays May Love IRS Equality

Monday, 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.

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USA: Three Reasons Gays May Hate IRS Equality

Sunday, September 1st, 2013

IRS_logoAlthough many gay lesbian couples may end up paying less when they start filing jointly with the IRS this next year, others may face the downsides.

Motley Fool reports:

Yet for some same-sex couples, being treated as married for federal tax purposes could actually increase their tax bills. Let’s take a look at some of the negative implications of the new IRS policy from the standpoint of same-sex spouses.

1. The marriage penalty will hit many same-sex spouses, especially those with roughly equal incomes. The IRS ruling will force same-sex spouses to face the same apparent inequities as their married opposite-sex counterparts. Under certain circumstances, federal tax law imposes higher total taxes on married couples than they’d have to pay if they could each file as single individuals. Especially with higher-income couples, threshold limits for higher tax rates often start at far less than double the corresponding limit for single filers, leading to bigger tax bills. In addition, married couples who file separate tax returns often face limitations and restrictions on deductions that single filers don’t.

Hit the link above for the other two reasons.

For me, it’s worth paying a little extra for the right to be treated equally. After all, we always said it was about both the rights and the responsibilities of marriage.

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USA: Analysis of the IRS Decision on Marriage Equality

Friday, August 30th, 2013

IRS_logoWe’ve got a couple follow-up stories this morning on the ramifications of the IRS decision to treat all legally married same-sex couples the same, regardless of where they live.

First off, from the Business Insider, a look at what the new rules will mean for the federal budget:

Over the long term, this decision will increase federal tax receipts by a little. But this year, the federal government may actually lose a little revenue. Some married couples face a “marriage penalty,” meaning they owe more taxes than if they were single, while others get a “marriage bonus.” But the penalty effect is more important. Back in 2004, the Congressional Budget Office estimated that gay marriage would mean about $700 million a year in added tax revenues. In practice, because of tax policy changes since 2004, the added revenues would likely be somewhat less. But one key component of today’s announcement is that the IRS will accept amended tax returns from gay couples going back as far as 2010. If you filed previous years’ taxes as single because the IRS didn’t recognize your marriage, you can go back and change old tax returns to say you’re married–but only if you want to.

And over at BuzzFeed, Chris Geidner is arguing that the IRS just made life difficult for states that don’t yet recognize marriage equality:

Jon Davidson, the legal director at Lambda Legal, said the decision is “going to make things more complicated for the states.” Before DOMA’s bar on federal recognition of same-sex couples’ marriages was struck down, married same-sex couples in states like Massachusetts had to file as unmarried at the federal level because “people were treated as married for state purposes but not federal ones,” he said. Now, he explained, the difficulties will be reversed — with same-sex couples being treated as married by the federal government but not by many state governments. The IRS’ decision is going to set up a series of questions around the country because more than half of the states ban same-sex couples’ marriages by their state’s constitution. At the same time, however, many states base their own tax filing system on federal filings. “I expect what will happen is that Ohio will say you have to file as single, and that they will do that based on the constitutional amendment,” Davidson said. Santa Clara University Law professor Patricia Cain agreed, telling BuzzFeed states like Ohio with such amendments will have to “change their state income tax reporting rules to unhook them from federal reporting.”

Again, this is just an amazing time to be alive. You can really feel the momentum building on our side – things are a changin’.

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USA: New Guidance on IRS, Treasury and Medicare Benefits for Same Sex Couples

Thursday, August 29th, 2013

USA MapThe IRS and US Treasury will recognize all legally married gay and lesbian couples, regardless of where they live. Edge Boston reports:

The Treasury Department and the Internal Revenue Service said Thursday that all same sex couples will be recognized for federal tax purposes, regardless of whether the state where they live recognizes the marriage, the New York Times reported today. “Today’s ruling provides certainty and clear, coherent tax-filing guidance for all legally married same-sex couples nationwide,” Treasury Secretary Jacob J. Lew said in a statement. “This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”

Plus, it’s retroactive. Wonk Blog reports:

What’s more, the rule is retroactive. As the press release puts it: “Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012.” Given that same-sex couples are likelier to have similar incomes than opposite-sex couples (which is why the Congressional Budget Office scored legal same-sex marriage as increasing revenue and reducing the deficit), the number of people eligible for refunds in those years will be considerably smaller than the total married population. And the tax bill for many couples will grow going forward.

In related news, same sex couples also got some guidance on medicare benefits today. The Washington Blade reports:

Gay married couples are now eligible for nursing home care through Medicare-funded private insurance in the aftermath of the Supreme Court’s decision against the Defense of Marriage Act, according to guidance from the Centers for Medicare & Medicaid obtained Thursday by the Washington Blade. In the guidance dated Aug. 29, Danielle Moon, director of the Medicare Drug & Health Plan Contract Administration Group, explains the new post-DOMA policy to Medicare Advantage organizations, or private companies that contract with Medicare to provide coverage. Moon says the ruling against Section 3 of DOMA requires these companies to cover services offered in a skilled nursing facility, or a nursing home, for a gay married couple to the same extent they would provide them to an opposite-sex couple.

Great news for US same sex couples!

After the Defense of Marriage Act

Friday, July 19th, 2013

DOMA OverSome more follow-ups for you in the wake of the repeal of DOMA section 3.

First off, Scottie Thompson at Equality on Trial has a nice wrap-up of the remaining DOMA cases, including:

Golinski v. Office of Personnel Management: this was the first case in which the district court had applied a heightened level of judicial scrutiny to laws that classify on the basis of sexual orientation to strike down Section 3 of DOMA. It was appealed to the Ninth Circuit Court of Appeals, and then stayed pending the outcome of Windsor. Last Thursday, the court asked the parties to write a letter addressing Windsor.

Over at The Washington Blade, Robert Turner notes that the sky hasn’t fallen in a post-DOMA (section 3) world:

It’s been a couple of weeks since the Supreme Court ruled that not only has the Defense of Marriage Act (DOMA) been declared unconstitutional, but also that the defendants in California’s Proposition 8 case had no legal standing to present their arguments. Rain still comes from the clouds, the sun still lights up the sky and days still go by. With the repeal of Section 3 of DOMA, the court opens the path for the federal government to recognize same-sex marriages in the states where there is marriage equality. In doing so, it allows for the application and eligibility of more than 1,000 benefits and responsibilities that are laid out in the federal code, including health benefits, long-term care, Family and Medical Leave, and federal retirement benefits, among others. It also subjects them to the same responsibilities of straight marriages, such as anti-nepotism rules and financial disclosure requirements for federal employees.

And now that the Federal Government is starting to recognize marriages for same sex couples, the IRS has a problem… whether or not to recognize the valid marriages of same sex couples who live in non marriage equality states. Business Week reports:

To avoid confusion, a single nationwide rule makes the most sense, says Patricia Cain, a tax law professor at Santa Clara University in California. “The IRS has the power to construe the Internal Revenue Code,” she says. “So for them it’s, ‘What does the word spouse mean?’\0x2009” President Obama has weighed in, saying it’s his “personal belief” that same-sex couples should get the same federal benefits as married couples regardless of where they live. He’s asked federal agencies to research legal issues that might stand in the way. Such a ruling, though, could cause headaches for the IRS, which until now has typically followed states’ definitions of marriage, says David Herzig, a tax law professor at Valparaiso University. “You may solve this problem,” he says, “but you may open up another.”

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USA: IRS Must Decide How to Handle Married Couples in Non Marriage Equality States

Sunday, July 7th, 2013

IRS_logoNow that the US Supreme Court has ruled that married gay and lesbian couples should be treated the same as straight ones, the devil is in the details for the IRS. The Pittsburgh Post Gazette reports:

The IRS’s major decision comes for residents of the other 37 states. Will it rely, as it has in some previous cases, on states’ own definitions of marriage? Or will it set a nationwide definition requiring all same-sex married couples to file as married taxpayers? What will happen to couples in civil unions or domestic partnerships? “The court’s decision, for a decision of this magnitude, is relatively short,” Joanne Youn, a member in the employee benefits practice at Caplin & Drysdale in Washington, told Bloomberg BNA. The justices refer to more than 1,000 federal laws pertaining to marriages and “they don’t go into details.” A single nationwide rule would make the most sense, said Patricia Cain, a tax-law professor at Santa Clara University in California. Without it, taxpayers could find ways to game the system, establishing a temporary domicile in whatever state fit their tax needs that year.

And all of this has to happen while the IRS is under extreme scrutiny after the fake scandal over heightened scrutiny for conservative groups (which turned out to be heightened scrutiny for groups across the political spectrum, and run by a conservative, to boot).

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NOM Testifies Before US Congress, Gets Called on Supposed “Social Welfare”

Tuesday, June 4th, 2013

The head of National Organization for Marriage testified before Congress today about the IRS scandal, and did a bit of rewriting history. reports::

Testifying before the GOP-led House Ways and Means Committee today over the IRS Tea Party ‘scandal’, NOM Chair John Eastman said “traditional marriage” supporters were “harassed, assaulted on the streets, vandalized on their property” during the Prop. 8 campaign to the point where they were fearful of giving money to the organization.

Oregon Representative Earl BlumenauerRep. Earl Blumenauer (D-OR) took NOM to task for claiming to be a “social welfare” organization:

Let’s get real and stop the charade about what a ‘social welfare’ organization is: Last year, internal National Organization for Marriage (NOM) strategy documents were leaked, stating that the organization seeks “to drive a wedge between gays and blacks” by promoting “African American spokespeople for marriage,” thus provoking same-sex marriage supporters into “denouncing these spokesmen and women as bigots,” and “to interrupt the assimilation” of Latinos into “dominant Anglo culture” by making the stance against same-sex marriage “a key badge of Latino identity.” Does this sound like social welfare to you? Social welfare organizations should work in the public interest — not to divide, exploit, and conquer.

I have a new favorite congressman – go get ’em, Blumenauer!

USA: Bill Reintroduced in U.S. Senate To Remove Unfair Tax Burden On LGBT Families

Thursday, April 18th, 2013

US CongressTwo US Senators, a Democrat and Republican, are introducing a bill that would help level the tax playing field for LGBT citizens. LGBTQ Nation reports:

U.S. Sens. Charles Schumer (D-N.Y.) and Susan Collins (R-Maine) on Monday introducing the Tax Parity for Health Plan Beneficiaries Act, a bill that would end the taxation of employer-provided health insurance for domestic partners, as well as the penalty imposed on employers who provide equal benefits to their LGBT employees. The bill, which was also introduced in the 112th Congress, addresses inequality in the U.S. tax code dealing with same-sex partners and spouses.

While the bill is highly unlikely to pass in the current gridlocked environment in Congress, we applaud Senators Collins and Schumer for making the attempt.

Taxes Fraught With Trouble for Newly Married Gay and Lesbian Couples

Wednesday, March 14th, 2012

Newlyweds Ruth Berman and Connie Kurtz are gearing up to file their first tax return as a married couple.

Typically, couples grapple with the financial pros and cons of filing separately or jointly. Though either way, they tell the IRS they are married.

However, for Ruth and Connie, prominent gay activists who were married last summer in New York after the state approved gay marriage, income taxes are far more fraught. The U.S. government does not recognize their marriage. By law they must file their federal income tax returns individually.

Full Story from the Huffington Post

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IL: Tax Trouble for Gay Couples in Civil Unions?

Monday, June 27th, 2011

Opponents of full marriage equality for same-sex couples often ask why the LGBT community can’t simply be happy with separate institutions and groupings of rights like civil unions and domestic partnerships.

Illinois recently became one such state to move to offer statewide protections supposedly equal, but separate, to marriage with the passage of the ‘Illinois Religious Freedom Protection and Civil Union Act.’ The act reads broadly about what it provides for same-sex couples, stating:

“This Act shall be liberally construed and applied to promote its underlying purposes, which are to provide adequate procedures for the certification and registration of a civil union and provide persons entering into a civil union with the obligations, responsibilities, protections, and benefits afforded or recognized by the law of Illinois to spouses.” (750 ILCS 75/5)

Full Story from Pam’s House Blend

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