For Gays, Marriage is Taxing
Married LGBT couples must navigate the tax tides of filing multiple returns to satisfy state and federal governments.
By Jason Carson Wilson
Love and taxes are among life’s sure things. Love brought Jeffrey Wall, 35, and Dennis Rinkenberger, 33, together. When Land of Lincoln’s civil union law took effect June 1, Wall and Rinkenberger seized the day—becoming Stephenson County’s first couple to file. They married on July 23.
Tax stress briefly supplanted bliss.
“It’s just a pain having to do them twice,” Wall said.
Wall and Rinkenberger own a home and business. While Wall sat in the Wall of Yarn, a quaint yarn shop, Monday, Rinkenberger prepared for a shift at Walmart to help make ends meet.
So, filing a 1040EZ isn’t an option. In fact, the newlyweds had to complete three different 1040 forms.
Since the U.S. government doesn’t legally recognize same-sex couples, thanks to the U.S. Defense of Marriage Act, Wall and Rinkenberger could only file federal tax returns separately, according to Wall.
DOMA defines marriage being between a man and woman. Since the federal government denies the existence of same-sex relationships, gay couples (whose marriages or civil unions are legally recognized by their home state) can’t file joint federal tax returns.
The U.S. Internal Revenue Service’s decree that same-sex couples file as single inspired the Refuse To Lie movement. The movement asks gay and lesbian couples to consider filing their federal returns jointly in defiance of the IRS and to protest DOMA. However, it also suggests filing as “single under DOMA” or attaching a letter, which states you are in a same-sex couple’s marriage.
“Across the country, legally married gay couples are taking a stand. We are refusing to lie about the fact that we are married,” the movement’s home page reads. “Taking this principled stand is not without risk and each person doing so needs to carefully consider those risks before deciding if it is a stand you are willing to take.”
With that said, Illinois encouraged them to file state tax returns jointly. However, they had to submit another federal 1040 tax form with their state return—all by mail. Filing separately as a married couple was also an option.
Ironically, Wall, the son of a tax accountant, wasn’t aware that was required. So, he had to file an amended return. Illinois required the 1040 tax form, in order to verify the couple’s adjusted gross income.
Filing jointly put about $50 more in their pockets. Since Wall and Rinkenberger’s business is a partnership, taxes are included in their personal returns. Claiming mortgage interest and property tax payment deductions takes more consideration.
“We had to plug the numbers in both ways and go with the best,” Wall said.
He used TurboTax to do their taxes—but Dad verified everything. Despite duplication of efforts, Wall said completing their taxes really wasn’t that complicated.
“It was pretty cut and dried,” he said.
Illinois isn’t the only state to allow couples to file their state returns jointly or separately as a married couple. Same-sex couples in California, District of Columbia, New Jersey and Oregon in civil unions or registered domestic partnerships can also file taxes jointly, along with married couples in Connecticut, Iowa, New York, Massachusetts and Vermont.
As Wall and Rinkenberger learned, filing jointly had a benefit—even if small. However, while full equality remains elusive, they’re denied other benefits enjoyed by straight married couples.
Unlike straight couples, the surviving spouse of a same-sex couple isn’t eligible for Social Security retirement or disability benefits. That, of course, includes the spousal retirement benefit, a person whose benefit is lower can take half of their spouse’s higher benefit. And gay and lesbian couples aren’t eligible to receive the lump sum Social Security benefit earmarked for funeral expenses.
Lambda Legal notes same-sex couples can be eligible for other federal benefits—after going through red tape. If both spouses are the legal parents of a child (biological or adoptive), either can claim the child as a dependent, in order to use the “head of household” status. That is, if the parent contributes more than 50 percent of child support.
Same-sex adoptive parents can also claim a one-time $13,360 tax credit (for a qualified adoption) for each child. That credit is phased out for those with adjusted gross income of more than $185,210, while those with more than $225,210 in adjusted gross income can’t claim the credit.
The phase out will have more of an effect on couples filing jointly than those filing individually as a single person. Same-sex couples with children would also be eligible for the $1,000 federal Child Tax Credit, which is available to those with dependents age 16 or younger. The credit phases out when the filing taxpayer’s AGI becomes more than $75,000.