Queer Taxes: Filing Tips for the LGBT Community
Tax season is upon us. For LGBT couples, this may be only the first or second year you can file taxes together. LGBT families may have different needs than straight couples, and transgender taxpayers may need guidance on how to file appropriately. These are the top considerations for LGBT couples and their families:
1. Only file your taxes jointly if you’re legally married to your partner.
Wedding bells are ringing after the Supreme Court ruled in June 2015 that same-sex couples have the legal right to marriage across the U.S. Even so, some LGBT couples choose not to become legally married for a variety of reasons. If you and your partner haven’t submitted a marriage license, then you won’t be able to file your taxes jointly.
2. File your taxes with the name on your social security card.
People changing their names must file their taxes with the name on their social security card. Maybe you’ve begun going by a different name at work, and even have credit cards in your preferred name.
If your name doesn’t match your social security card, the IRS won’t accept your tax return.
When changing your name, the first thing you should do after receiving the court order is to take it to the Social Security Office. This also affects people changing a name after marriage. Make sure to give yourself enough time to get a new social security card after changing your name, since it can take up to 14 days.
3. Unmarried homeowners may benefit by deducting mortgage interest.
The Ninth Circuit ruled that unmarried co-owners of a home can deduct mortgage interest on up to $2.2 million of acquisition debt. Married couples, meanwhile, are limited to $1.1 million. You may be able to receive a refund from previous years, as well.
4. Couples adopting children may benefit from marrying first.
Are you and your partner thinking about adoption? Whether you do it together or as a second-parent adoption, you may want to consider marrying in the year prior to adoption. Let’s say, for example, Jane wants to adopt Jill’s child. Any expense that Jane incurs prior to marriage isn’t included in the qualified adoption expenses.
Meanwhile, Jim and Frank haven’t married, but they want to adopt a child together. Their joint income is more than $195,000 and the maximum allowance is $194,580. For both of these couples, it may be more beneficial to marry prior to the adoption.
Most couples can file their taxes independently through TurboTax or H&R Block, but CPA Rosalind W. Sutch, who focuses on LGBT tax and financial planning issues at Drucker and Scaccetti in Philadelphia, recommends that some couples seek advice from a qualified tax professional familiar with LGBT issues.
Unmarried couples who live together and share ownership of property should talk to a tax professional, especially if they have children.
Married couples who did estate planning before national marriage equality passed in 2015 should also review their documents with a professional to see what, if anything, you need to change.
Sutch explains that she has recently seen a number of situations and mistakes that LGBT couples should be aware of when filing taxes. In one case, unmarried partners with teenage children used two different tax preparers, and they lost tax credits because the preparers didn’t communicate. In this case and others, it’s wise to reach out to a tax professional.
5. Another difference in taxes for same-sex couples after the Marriage Equality Law:
Jill makes $80,000, and Jane makes $35,000. When they filed separately before their marriage was recognized, Jill paid $13,219 in taxes and Jane paid $3,244. Between the two of them, they paid a total of $16,463 in taxes. This year, they can file jointly as a married couple. With the same income this year, they pay $15,188. That saves them $1,275 that they can spend on a trip to the Bahamas!
*Tax amounts estimated with H&R Block’s tax calculator.