How ’bout that Edie Windsor?!

So what does the end of DOMA mean to your tax & financial circumstances?

 If you’re gay & married and live in a state where your marriage is recognized, you will now be married under federal law too.  The rights & responsibilities of marriage will be yours, including:

  • potential income tax benefits (&/or a marriage penalty)
  • estate planning benefits, including inheritance rights
  • government benefits, including receiving Social Security, Medicare, and disability benefits for your spouse
  • employment benefits, such as obtaining health insurance through your spouse’s employer (without additional tax) and the right to take medical leave to care for a spouse who becomes ill
  • decision-making benefits, including the right to make medical decisions if your spouse is incapacitated
  • sharing income and property acquired during the marriage
  • liability for family expenses and financial support, including support of any children of the marriage, and in the case of divorce, equitable property division & potential financial responsibility for your spouse
  • consumer benefits, such as family rates for health, homeowners’, auto, and other types of insurance.

There are 1,138 federal “benefits” allowed to married couples at last count.  Some are potentially very significant to your tax and financial planning – like how to file your income tax return, and how to structure Social Security claims to maximize benefits.

 I believe that, in the long-term, gay marriage will be legal everywhere.  “The arc of the moral universe is long, but it bends toward justice.”– Parker/MLK.  Or if you prefer numbers to theology, the statistician & blogger Nate Silver of fivethirtyeight.com projects majority public support of gay marriage in 44 states by 2020.

But between now & then, there will be much confusion and litigation.  If you are living in a state which does not recognize your marriage, either because you married out-of-state, or you moved since getting married, your relationship is now evolving with state law and federal rulemaking.  Section 2 of DOMA, which permits states not to recognize gay marriages from other states, was not overturned.  Federal agency rules vary as to whether state of marriage or resident state controls.

If you are in a long-term relationship and not married, you should still be aware of the changing environment so that you can make wise tax and planning decisions.

In either event until you have marital protection, you should consult with an attorney who specializes in LGBT estate planning.  You need to ensure that you and your partner – and your relationship – are legally protected, including powers of attorney, wills, living wills, correct ownership vesting of assets and debts, and coparenting agreements for any children.

At 1TaxFinancial, we’re knowledgeable and do tax prep and planning in this environment, and pledge to maintain currency as the law evolves – to save you time, expense and grief later.  You’ll have a personal relationship with your tax professional, and you’ll get year-round access!  Professional preparation also typically costs less than you fear – and will save you that much in tax &/or trauma!  A typical return might run $200; more with a small business, complex investments or rental property – and be sure to ask about our 50% Partner Discount!

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