Magazine article The Advocate (The national gay & lesbian newsmagazine)

Internal Revenue Disservice: Tax Time Reminds Same-Sex Couples How Antigay Bias Can Really Hurt Your Bank Account. (Finance)

Magazine article The Advocate (The national gay & lesbian newsmagazine)

Internal Revenue Disservice: Tax Time Reminds Same-Sex Couples How Antigay Bias Can Really Hurt Your Bank Account. (Finance)

Article excerpt

When Daniel and Ian Chesir-Teran of South Orange, N.J., were married in a Jewish ceremony in 1997, they did what a t of married couples do--they combined their finances.

Ian was and still is a lawyer, earning what he calls "a comfortable salary," and Daniel was a doctoral candidate who earned $6,000 a year. "Had our marriage been legally recognized," Daniel says, "we would have been able to file jointly, and we would have received a larger tax deduction."

The couple's taxes became even more complicated and even more unequal to those of married straight couples in similar situations when they adopted their son, Eliezer, in 2001. "For the first year I spent a lot of time at home with Eli and I wasn't working," Daniel explains. Not only couldn't the couple file jointly, to combine Daniel's low income with Ian's higher one to thus be taxed at a lower rate, but "we weren't eligible for the full child tax credit," Daniel explains. "But we would have been eligible if we were legally married."

Situations like theirs are repeated in tens of thousands of lesbian and gay households across the country, where federal laws deny the fiscal realities of many same-sex couples. "Same-sex couples want to be able to live their lives as married," says Los Angeles tax lawyer Steven Weissman, "but the tax code really discourages you from being able to do that."

So while politicians carp about the federal tax code's so-called marriage penalty, which causes some legally married couples to pay more taxes than they would if they filed as two singles, many gay and lesbian couples suffer a particular form of tax discrimination--call it the "no legal-marriage penalty." They're simply not recognized in the tax code as economic units.

The problem is particularly pronounced in households where one partner makes significantly more than another. "If one person stays home with the kids and the other works, the couple will pay more taxes than a similarly situated married couple with kids," explains Pat Cain, a University of Iowa law professor and an expert on the tax code's impact on same-sex couples. Moreover, same-sex couples encounter considerable tax discrimination in the event that one partner dies and leaves his or her retirement savings or estate to the other.

Not to say that some lesbian and gay couples don't fare better than legally married couples under the current federal income tax structure. "With couples who are not legally married, if you have two professionals who make $100,000 each and a married couple that makes $100,000 each, the married couple will pay more in taxes," says New York certified public accountant Tina Salandra.

But that fact just highlights the inequity in the law, Cain says. "Straight people can choose to get married or stay single, depending on what's advantageous for them taxwise," she says. "For gay people, there's no choice."

According to Internal Revenue Service spokesman Anthony Burke, same-sex couples are barred from filing joint returns because "the determination of marital status for federal income tax purpose is made in accordance with the law of the state of the marital domicile."

In other words, states determine whether a couple is legally married, and because no state recognizes marriage between two people of the same sex, the IRS won't either. Vermont couples joined under that state's civil unions law have the option of filing state taxes as either "Civil Union Partner Filing Jointly" or "Civil Union Partner Filing Separately," but civil unions are not recognized by the federal government.

Because the IRS and most states don't recognize lesbian and gay families, numerous potentially discriminatory practices are set in motion, says attorney Kate Kendell, executive director of the San Francisco-based National Center for Lesbian Rights. Not only does the law view economically interdependent couples as single filers, but in most of the country, children born to or adopted by one member of a couple can't be legally recognized as the children of the other member of a couple, Kendell says. …

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