IRS to Gay Newlyweds: Not So Fast

I have listened to people in Transgender Inc., some of whom are in marriages that are heterosexual marriages based on being entered into prior to coming out as transsexual or transgender as well as heterosexual post-transsexual folks say that gay and lesbian people are too focused on marriage equality and should be focused instead on passing a “Trans-inclusive ENDA”.

Never mind that in the hire and fire at will world many of the people in the US live in such a measure is meaningless.

But there is a certain level of chutzpa in expecting gay and lesbian people to drop something they have been working on for years, especially from people who have in the past or currently are enjoying the heterosexual privilege of a federally recognized marriage that is recognized from sea to shining sea.

Marriage equality is a prime LGBT/T issue.

From Business Week:

Federal tax benefits of marriage don’t extend to same-sex couples

August 4, 2011

For all those same-sex newlyweds in New York, Lawrence S. Jacobs has a message: Enjoy the Champagne and the honeymoon, but expect no gifts from the IRS. Jacobs, a lawyer in Washington, specializes in estate planning for same-sex couples—and in delivering the bad news that their unions aren’t legal in the eyes of the IRS, a policy that will cost them time and money during tax season.

Same-sex couples in Washington, which last year legalized gay marriage, must fill out a federal return to make calculations required for their D.C. joint return. But then they must set that work aside and fill out separate federal returns because the IRS doesn’t regard their union as legal, Jacobs says. “You just spent decades getting your marriage recognized, and now the feds say, ‘No, you’re not,’” says Jacobs, who as a partner in a same-sex marriage has firsthand experience of the problem.

This cumbersome process applies to all married same-sex couples in the U.S. It comes courtesy of the Defense of Marriage Act, or DOMA, which defines marriage as “a legal union between a man and a woman as husband and wife.” The Obama Administration, saying DOMA is unconstitutional, has instructed federal agencies to do what they can under existing law to extend benefits to same-sex partnerships. Such rule-stretching doesn’t go far with the IRS, says Brian Moulton, an attorney with the Human Rights Campaign, a Washington gay rights advocacy group. “There’s a relatively small space before you bump up against DOMA,” he says. “I don’t think there’s much they can do.” The IRS declined to comment.

Filling out a “dummy” federal return can add $300 to $400 to a same-sex married couple’s tax preparation bill, according to Larry Rubin, a partner at accounting firm Aronson in Rockville, Md. As a result of DOMA, gay couples must also pay income tax on a portion of employer-provided health insurance, which isn’t taxable for heterosexual married couples.

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