Marriage equality could bring tax windfall for same-sex partners
The continued ban on same-sex marriage in Colorado affects gay and lesbian partners on more than just the personal level. Though not being able to marry the person they love and being discriminated against during child custody disputes is considered hurtful enough, the ban on gay marriage also hurts same-sex partners financially, particularly when it comes to paying taxes.
Due to the federal Defense of Marriage Act, gay and lesbian couples can\’t file federal taxes jointly. This causes them to lose out on the tax breaks that heterosexual married couples enjoy, such as avoiding paying taxes on property inherited from a spouse.
As a result, many gay and lesbian couples pay extra income tax, including estate taxes on property bequeathed to them after their partner dies.
That may all change, however, if the U.S. Supreme Court hears challenges to DOMA and gives federal recognition to married same-sex couples in states where gay marriage is legal.
Gay couples that receive federal recognition could get back thousands of dollars in taxes. The change in the law would allow them to amend their tax returns and claim the extra taxes paid after they were married. This could result in $10,000 or more in refunds per year. The windfall would probably be most felt by people who had to pay estate taxes on property inherited from a deceased spouse.
The only caveat is that people can only amend their tax returns for the prior three years. They will need to change the filing status to “married and filing jointly” to take advantage of the tax breaks. Before making any changes, though, it is a good idea to talk to an accountant to ensure it makes financial sense to do so.
Source: Money.CNN.com, “Same-sex couples could see tax windfalls,” Blake Ellis, Nov. 14, 2012′
0 Comments