The End of the Gay Tax

[xchrom]

http://www.theatlantic.com/business/archive/2013/06/the-end-of-the-gay-tax/277244/



The Defense of Marriage Act is largely good and gone, meaning that same-sex spouses can finally enjoy the same federal rights as heterosexual couples, at least in states that recognize their relationships. If you're a bit fuzzy on what exactly that means, don't worry: It's a lot for anybody to wrap their head around. The federal code includes an estimated 1,138 provisions that award "benefits, rights, and privileges" based on marriage status.

And many of those rights come with a price tag. Think social-security benefits or tax breaks. In total, they can be worth thousands of dollars per year. Below, I've pulled out a few examples, just to provide a small, quantified taste of how the federal government has been financially discriminating against married gays and lesbians these last several years.

Joint Tax Filing: Worth $2,325 Per Year
You often hear about the "marriage penalty" in the U.S. tax code. But many couples -- usually those where one spouse earns significantly more than the other -- end up saving cash by filing jointly, an opportunity that until now has been denied to gays and lesbians. M.V. Lee Badgett of UCLA's Williams Institute, a think tank that focuses on LGBT issues, estimated what that was costing them in a 2010 law-review article titled "The Economic Value of Marriage for Same-Sex Couples." She found that in Massachusetts, 66 percent of gay and lesbian couples would have saved an average of $2,325 on their IRS bill if allowed to file jointly. About 11 percent would see no change, and 23 percent would pay an average of $502 more.

Social Security Survivor Benefits: Worth $5,528 Per Year
Gays and lesbians pay into Social Security just like the rest of us, but until now, they haven't enjoyed the same payoff. Most couples don't make the same salaries over their career, so when a married American retires, the Social Security Administration gives them two options: They can receive their own benefits, based on years of earnings, or receive one half of their spouse's monthly benefit -- whichever is higher. If the breadwinner of a couple dies, the surviving husband or wife is entitled to receive their spouse's more generous benefits instead of their own.

[dbackjon]

1. For those lucky enough to live in a state that has gay marriage

The rest of us are still screwed.


But hey, according to Obama, that is A-Ok

[xchrom]

2. +1

[mitchtv]

3. Think of the lawsuits to come

"We've only just begun"

[Pab Sungenis]

4. We've seen the fact of this first-hand.

Because New Jersey forces us to file our state taxes as "married," and data has to be copied from the Federal return to the State return, we've had to do five different Federal returns every year (two "single" for the Feds, and three theoretical for the State based on whether we are filing jointly or separately) so we got to see how different our taxes would be.

Wednesday afternoon, a couple of hours after the Court handed down the decision in Windsor, we filed amended returns for 2010 and 2011. (I filed for an extension on 2012 just in case DOMA was struck down, so we wouldn't do the theoretical unless needed.) For 2010 we will be due an extra $302.00 in refunds, and for 2011 we will be due an extra $1,230.00 in refunds. If I remember, our Federal taxes were $900.00 higher in 2009 and $1,750.00 higher in 2008, but sadly you can only go back and amend for three years.

And if the IRS rejects our new returns? Well, one more lawsuit to file I guess.