Wednesday, April 13, 2011

A Taxing Situation

It's that time of the year again when Americans across the nation receive their tax documents in the mail with all the joy of a jury summons and discover that half of them are STILL missing, Scream at their computer screens while trying to navigate clunky and down right byzantine tax prep software, and watch the calendar with mounting dread. For many of us Tax day means the annual migration  to the post office at 5 minutes before closing for the great convocation of chronic procrastinators. However, you do get them done, it is generally a pain in the keister for everyone. However...if your gay and partnered in some legal form, the government has several ingenious ways to screw us even more.  For most gay couples doing our taxes has never been simple..the Defense of Marriage Act sees to that...but this year the government has invented some new ways to drum up extra cash and again let us know that they don't regard LGBT couples as equal to our heterosexual counterparts.

so we found out when we began this years tax odyssey...

As I said, the IRS has never treated gay couples in a manner that affords recognition or even dignity of gay people We have always had to find creative ways to work within a system that just does not account for us. In previous years, this meant that My husband had to claim me as a dependant along with the kids. It wasn't a perfect solution and it demotes my relationship to him to something akin to an unemployed squatter....However, Jay being employed and me a stay-at-home parent there was really no better way to handle it. This was how it worked from year to year. BUT...last year, for our own curiosity we had the tax preparer calculate how much we would have gotten back if we had been able to file as a married couple. The answer turned out to be an approximate $4000 dollars more. Thank you so much DOMA and state sanctioned discrimination..../sarcasm off. This year it got a whole lot more complicated...and many of us could take a bigger financial hit.

My husband Jay is very conscientious when it comes to tax filing. As soon as the documents come in the mail, he's down at the tax preparers taking care of business. Everything was ticking along like normal until it we were informed that, since we were a gay couple, we were not able to Efile.....What?...o.k. fine....We mailed in out return and dug in for the long wait. Eventually we were informed that our return had been rejected because of a handful of new tax rules for gay couples..."oh crap", we thought...hearing back from the IRS after filing is usually not a good thing. What did they want?  Well, We were informed that we would have to refile because...the government now requires legally married gay couples to combine their reportable income and then split it evenly between them. Both partners then file as single and report half of the income. Wow...seriously? This is how they dance around our status? It seemed an utterly lame solution that only further exacerbates discrimination of gay couples in taxation.

For a family like ours in which there is only one income and worked to our benefit. Combining his income and my nothing between us halved my husbands taxable income and each of us got to claim one of our children as a dependant. For once, the tax system had come through for us....however....and here's the big BUT....What about couples with two incomes and no dependants? Adding up their income means paying taxes on a MUCH higher amount of money for each person. It is not fair taxation in that it places a a larger tax on an individual than he or she has earned and still does not provide parity with heterosexual couples who can file jointly. It is amounts to another very unwelcome financial hit that many of us just cannot absorb these days.

In addition, the experience of refiling was ridiculous. They required that I use my husbands W-2 form to report the income they attributed to me. This strikes me as wrong in that this document is not mine. It's issued to my husband's social security number and is in no way legally linked to me other than through my marriage. You know...the one which the federal government does not recognize. They consider us as separate, non related individuals, so why would I use someone else's tax documents to report income I did not earn myself if I am not legally related to that person? In addition, filing an amendment to our taxes required an additional $600 in preparation fees and we were still required to snail-mail it in. I would also put dollars to donuts that the IRS will scrutinize these returns very closely. IF the government does not shut down for lack of a budget it will still be a very, very long time before we see a refund.

Is all this really worth it to put a band aid over that fact that DOMA is unconstitutional? To me it seems like taking the hoops we were jumping through before, lighting them on fire, and suspending them over a shark tank. Is it any wonder why gay people are crying foul?

Frustration over the governments willingness to take our money while denying us our civil rights has led many to calls for protest actions. Some have advocated not paying taxes until the government acknowledges our relationships. Others advocate claiming a married status and filing jointly as a form of protest even though this is illegal. Both tactics have some very serious repercussions...namely heavy fines and possible prison time. Now while some people have the nerve for that...I don't. But there is another way...

It has been suggested to me that you file your taxes exactly as the new rules require and send it off...then, file an amendment to your return in which you file as a married couple. The IRS will accept your correct return first and reject the amended version. How does this help you ask?...It creates an important paper trail. When DOMA finally does fall and the government recognizes same-sex marriages, you will have a tax record going back that you tried to file according to your actual status as a married couple and were denied..therefore you could be entitled to the additional monies you would have been entitled to. Depending on how long it takes to repeal DOMA...that could really add up. As an example, even though our family dodged the combined income bullet this year, had we been able to file as married we would still have received another $2000 refund. Drag that out over a few years and thousands of married gay couples and the pentagon won't be able to buy toilet paper for a month. (**Disclaimer....Please remember I am not a tax professional nor a tax law expert, I am just a humble blogger passing along information I found helpfull. Please verify for yourself before engaging in any form of tax protest.)

In the meantime we are still waiting....Waiting for our returns to be processed, waiting for documents, hopefully waiting for refunds, and all of us are waiting for our nation to finally open it's eyes and see that we are equal American citizens. Maybe when that day comes we can all be afforded the luxury of buying complicated and often inaccurate Efiling software and be totally glad for it...well, we can dream can't we?

Got a tax horror story? We want to know! leave a comment and let us know how being gay has affected your tax status.

Until next time dear readers....


  1. Hey I didn't even receive honorable mention for turning you guys onto this?


    William Volkl

  2. When I was a postdoctoral researcher at Purdue University, the university offered domestic partner benefits, including insurance. Since my partner was an AmeriCorps VISTA at the time (which didn't offer adequate insurance) and is also a severe asthmatic, we needed the insurance coverage. When tax season rolled around, I learned just how little the government thought of my relationship. First, whereas my portion of my benefits was deducted from my income pre-tax and thereby reduced my taxable income, the cost of my partner's benefits were deducted after taxes (i.e., I paid taxes on the cost of his benefits). Second, the cost of my partner's benefits to the University were added to my taxable income as if they were wages I had earned. So I paid taxes on the benefits twice. Third, the additional "income" raised the amount of tax I owed the government, but nothing was withheld for it. Since I was a poor post-doc and my partner was a poor VISTA, this owed taxes had to be put on a charge card at 12% APR and paid over time so that we could afford food, heat, &c., adding even more to what we owed the government because my partner needed adequate insurance in case he had a major attack. It's been 5 years since we've moved on to Nebraska, where the university doesn't even offer domestic partner benefits, but it still irks me.

  3. Great writing again, Bryan. Funny, infuriating, ridiculous, enlightening...nice job.

    Although I am not partnered and didn't have to deal with all the red tape you guys have had to, my tax preparer did mess up (score!), so my taxes are going to be filed electronically at the last minute. Yay...more time to think about them! :P

    Btw, " that half of them are STILL missing" -- haha, yes, that's so true! I don't understand why my tax preparer's deadline is several weeks before I even get many of my forms. Ugh!

    Glad you and Zeus are back from the hospital!

    Matt in NYC

  4. Oh, and I time I was audited -- about a decade ago. They told me that I owed about $13,000! After about a year of trying to explain to them, through tons of paperwork and calculations, that, um, no, I don't owe them anything...they finally admitted they were wrong, and that I didn't owe them squat. They were only off by about...oh...$13,000!! Crazy, huh?


  5. Hi bryan
    sounds like tax depts are the same all over the world, a bunch of they want my money as fast as poss but take there sweet ass time to get my money off my ex....for maintenance which I need for the basic needs of our child, but he dicks around in paying & the tax dept dont go out there way but when I owe them money....they hound me to pay..... yea great system ... sounds like they are LOVED BY EVERYONE
    so thats my rant on the IRD...for NZ

  6. Although we were married in Canada over 5 years ago, my husband and I always file "Single" but add a note that we are doing so only due to DOMA.

    Things are fine doing this; however, last year we both owed additional taxes at filing time. So I paid the bill with one check and included two 1040-V's. Additionally, I wrote both our SSN's on the check.

    When the IRS got the check, they credited the whole amount to my husband and none to me. After dinging me for interest and penalty and sending my husband a refund check, we finally got the whole matter straightened out. It took almost a year.

  7. So, what do you do when it comes to California state taxes? I'm guessing you can file state taxes as married, filing jointly, correct? Do you have to compute your federal gross income as married, filing jointly first, in order to put that number on your CA taxes? Just curious.

  8. oh yes Sakura....the state is much easier. We filed jointly with them AND Efiled :D