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Houston Voice, No. 1171, April 4, 2003
File 005
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Houston Voice, No. 1171, April 4, 2003 - File 005. 2003-04-04. University of Houston Libraries. University of Houston Digital Library. Web. November 28, 2020. https://digital.lib.uh.edu/collection/montrose/item/17058/show/17033.

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(2003-04-04). Houston Voice, No. 1171, April 4, 2003 - File 005. Montrose Voice. University of Houston Libraries. Retrieved from https://digital.lib.uh.edu/collection/montrose/item/17058/show/17033

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Houston Voice, No. 1171, April 4, 2003 - File 005, 2003-04-04, Montrose Voice, University of Houston Libraries, accessed November 28, 2020, https://digital.lib.uh.edu/collection/montrose/item/17058/show/17033.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

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Title Houston Voice, No. 1171, April 4, 2003
Contributor
  • Weaver, Penny
Publisher Window Media
Date April 4, 2003
Language English
Subject
  • LGBTQ community
  • LGBTQ people
  • Gay liberation movement
Place
  • Houston, Texas
Genre
  • newspapers
Type
  • Text
Identifier OCLC: 31485329
Collection
  • University of Houston Libraries Special Collections
  • LGBT Research Collection
  • Montrose Voice
Rights In Copyright
Note This item was digitized from materials loaned by the Gulf Coast Archive and Museum (GCAM).
Item Description
Title File 005
Transcript 4 APRIL 4, 2003 www.houston voice.com HOUSTON VOICE national news Domestic partner benefits create 'tax hit' for couples GAY TAXES, continued from Page 1 Gay couples not 'married' Gay single people don't face any different issues when filing their income taxes than other singles, according to Marta Shen, a CPA and senior financial advisor with the Atlanta-based firm of Shen, Clarke & Associates, a financial advisory branch of American Express Financial Advisors, Inc. "They are equivalent to straight single tax fliers — there's no difference there," said Shen, whose client-base is more than 50 percent gay But gay couples must confront a variety of questions that their married counterparts don't face Couples who receive domestic partner benefits will find themselves paying more taxes than if they were married, and must decide if the benefits outweigh the costs. Couples who own a home together must decide who gets to deduct the interest paid on their mortgage. Couples who share a savings account have to determine who claims the interest income. Couples who are both legal parents to their children must figure out who should claim the kids as their dependents, and there are myriad other issues. "The negative impact is that a gay couple has to do a lot more tax planning in advance," said Harold Lustig, president of San Francisco-based Lustig Financial Services and author of "4 Steps to Financial Security for Lesbian & Gay Couples." The 2000 Census documented 594,391 house holds led by same-sex "unmarried partners," and gay activists claim the number is a vast undercount of gay couples in the country But despite clear evidence that gays are forming families, the federal government still offers no legal recognition for the relationships. Gays are not allowed to marry anywhere in the US. And while gay partners can be just as financially intertwined as many heterosexual spouses, the Internal Revenue Service uses marriage to determine your tax filing status, the basis on which the income tax you owe is calculated. "In general, your filing status depends on whether you are considered unmarried or married," the IRS explains in Publication 501, "Exemptions, Standard Deduction and Filing Information." "A marriage means only a legal union between a man and a woman as husband and Financial advisors Marta Shen and Harold Lustig said gay couples could benefit by not filing joint tax returns if they plan carefully. wife," the publication warns. Even if gay couples consider themselves married, they shouldn't try to submit a married tax return, according to Eric Erickson, spokesperson for the IRS field office in Atlanta. Tax returns include your Social Security number and Social Security information includes your sex. "Basically we do a check with your Social Security number, and it's going to come up [that both filers are the same sex]," Erickson said. "We would catch it and your return would be rejected." The Internal Revenue Service can't independently make changes to tax filing status, Erickson noted. "Every piece of the tax law has been written by Congress," he said. "We are only here to enforce it." Tax disadvantages for gay couples Being unable to acknowledge relationships on tax forms is just one of the many types of das? crimination gay couples face because they cant marry according to Evan Wolfson, executive director of the Freedom to Marry Collaborative, a national group lobbying for equal marriage rights. "Marriage is the gateway to a vast array of legal and economic privileges that cuts across virtually every area of life," he said. One major way that the tax code clearly discriminates against gay couples lies with the taxation of domestic partner benefits, according to the Human Rights Campaign, the nation's largest gay political group. "As a growing number of employers offer domestic partner benefits, gays and lesbians are discovering a hitch — domestic partner benefits, unlike health benefits provided to married heterosexual couples, are taxed as income," HRC notes on its FamilyNet Web site. With most health benefits, the employee pays part of the cost and the employer pays part of the cost. Unlike with spouse benefits, the employer's contribution towards DP benefits is taxable income for the employee. For example, if a company contributes $3,000 per year towards spouse benefits for a straight employee who earns $30,000 a year, the employee is still taxed on $30,000. But if the company contributes the same $3,000 to domestic partner benefits for a gay employee who earns the same salary, that employee will be taxed on $33,000. "The tax hit is significant enough that many people who are eligible for domestic partner benefits don't take advantage of them," said Lara Schwartz, senior counsel for HRC. "It's a very real disadvantage." HRC is lobbying for federal legislation to solve the problem, said Barbara Menard, deputy political director for the Washington- based advocacy group. Sponsored by U.S. Rep. Jim McDermott CD- Wash.), H.R. 935 would change tax laws to treat domestic partner benefits like spouse benefits. It currently has 30 co-sponsors and is pending before the House Ways & Means Committee. Meanwhile, gay couples also need to be aware of other ways they can be hurt by the tax code because their relationships aren't treated as marriages, such as estate taxes, real estate transfer taxes and capital gains taxes, Schwartz said. Older gay couples may be particularly hard hit "For example, on the sale of a home, under federal tax code a single person is entitled to up to $250,000 in gains on the sale tax-free, but a married couple gets twice that," Schwartz said. "For a gay couple that has lived in a home for a very long time and is planning on using [the income from the sale] as retirement savings, that lower threshold can absolutely create a tax hit" she said Possible perks for partners Despite tax disadvantages on issues like domestic partner benefits, not filing as a married couple actually offers some significant possibilities for gay partners to reduce the amount they owe, according to financial advisors Shen and Lustig. "On the tax side, I think it is better to be gay — if you know what you are doing," Shen said. As an "overall strategy" for gay couples, "the person who is making the most should deduct the most, and whoever is making less should claim as much of income as possible," she said. The key to saving money is to look at the couple's taxes as a whole, so that the total paid by both partners is less, Lustig agreed. "You have to look at the pool of money as our money and the tax paid as our taxes paid," he said. Lustig advocates a strategy called "bunching" — where the person with the higher income itemizes deductions, taking all of them, and the person with the lower income takes the IRS' standard deduction. But making such a strategy work requires planning. For example, the partner who plans to claim the mortgage interest deduction has to be named on the mortgage, and if both partners are named, the one who plans to claim the deduction should write the checks, Lustig said. And if couples are making charitable donations, those checks should also be written by the partner who will itemize deductions, he said. Gays can also find ways to lower their taxes when it comes to claiming dependents, Shen and Lustig said. In gay families in which only one partner is legal parent to their children — because second-parent adoption or joint gay adoption isn't allowed in their area — there is no choice in who can claim the child as a dependent. But if both partners are legal parents to the child, "the person with the bigger tax problem should take the child as a dependent if they meet the rules of dependent deductions," Lustig said. The rules for claiming someone as a dependent can also provide opportunities for gay couples in which only one partner works, although Lustig strongly recommended seeking profes- sional tax help before trying to claim your partner as a dependent due to the complexity of the law The IRS lists five tests to determine if some one can be claimed as your dependent, including that you must have provided more than 50 percent of their support and they must not have a gross income of $3,000 or more during the year. One particular part of the tax code raised issues for gays, Shen said — a clause mandating that "a person does not meet the member of household test if at any time during your tax year the relationship between you and that person violates local law." Common tax questions facing gay couples Note: These answers are a general guide. Every However, trlre is a taxpayer ID where the mort- Again, there is a "prinWy" perSflffwho tlt_RS I work outside of the home,. Note: These answers are a general guide. Every gay couple's individual circumstances are different. To see how these issues will impact your individual situation, consult a tax advisor. / receive health insurance through my partner's domestic partner benefits. Do I have to pay ^ taxes on the benefits, or does my partner? Your partner will have to pay taxes •' on imputed income for the DP bene- , ,, fits that her company provides. .'/' My partner and I own our home jointly. Who can deduct the mortgage interest? Do we have to split it or can one of us take the whole deduction? If the mortgage is held jointly, technically the person who pays is the person who gets to deduct However, tHIre is a taxpayer ID where the mortgage interest is reported on form 1098 and that person is the "primary" person on the mortgage and person the IRS "connects" with the mortgage. If the person that is not the primary takes it, it's best to have an attachment to both returns explaining it Oftentimes, certified public accountants / will look at it both ways, i.e. what the ram- ' - ification would be if one partner (usually the one that makes more) takes it or if they split it, and what percent each should take to make it the most beneficial. My partner and I have a joint savings account that earns taxable interest. Who claims the interest as income on our taxes? Again, there is a "prinftfy" perWwho t_.RS connects the interest to who gets the 1099-INT. Usually, it's best to have the partner earning less to report since it'll be in a lower tax bracket. My partner and I are both legal parents of our child. I'm the birth mother and she adopted our child through second-parent adoption. Which one of us can claim the child as a dependent? Or can we both? Unfortunately, there can only be one exemption made on one child, therefore you're going to have to decide who that will be. Both of you have the ability to claim the child as long as the other five requirements of dependency (provide more than 50 percent of the support, less than $3.0(5, in income, citizenship, relationship/member of household, not filing jointly) are met It would make sense for the one in the higher bracket to claim the child. e, and my partner is a stay-at-home parent. Can I claim my partner as a dependent on my taxes? Most accountants will agree with this as long as the five dependency tests above are met. 7 work outside of the home, and my partner, who has HIV, receives disability checks. Can I claim him as my dependent? It depends. If the five tests above are met, then usually you can claim him as a dependent. The big question is if it will jeopardize any benefits, like Medicare, Medicaid and or SSI. That's a guestion that is best left to an attorney specializing in this field. Sane:MartaShm,senicrfimncMaa%orwiththeAtlan^ basedfmdShmOarte&AssocatesafinatiMad^ branch of American Express FinancialAdvisors, Inc.
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