Same-Sex Marriage: Where You Stand With Your Finances
Getting married can bring very important financial changes. Eventually, when same sex unions are recognized by federal law, America?s gay and lesbians will get access to all 1,138 federal statutory marriage rights.
More than 7,000 lesbian and gay couples have reportedly gotten married in the Bay State. In previous articles, I?ve discussed some of the new state rights for these couples, in addition to legal issues worth considering before tying the knot.
The following are the biggies on that federal list of marriage rights, made unattainable, for now, by the Federal Defense of Marriage Act. DOMA was passed by the U.S. Congress and signed by former President Clinton in 1996. It bars federal recognition of same-sex marriages once they become legal in any state. Now, here?s what lesbians and gays really want?.the same rights as heterosexuals:
The April, 2003 tax returns were the first where heterosexual married couples didn?t getting whacked by the former so-called ?marriage penalty?. The relief was provided by the Economic Growth and Tax Relief Reconciliation Act of 2001. Married, same-sex couples aren?t eligible for this tax relief.
Federal law allows all property of a recently deceased person to transfer, gift and estate tax-free, to his/her surviving spouse. It's only at the death of the second spouse that heirs must pay estate taxes if the estate is more than $2 million (in 2006 - 2008; $3.5 million in 2009). When one partner dies in a same-sex couple, the surviving spouse will be forced to pay federal estate taxes on any inherited assets because the spousal exclusion does not apply.
Heterosexual couples have, for many years, been entitled to the Social Security benefits of the other spouse. If a retired man dies and his monthly Social Security benefit is higher than that of his surviving wife, she can elect to receive the higher benefit. Under DOMA, this scenario is not possible for retired same-sex couples. The deceased spouse?s
Social Security will cease upon death.
If the partner of a gay employee elects to receive health insurance through domestic partner coverage, the IRS requires the employer to add the "value" of the partner's health insurance to the gay employee's income. The employee must now pay income tax on this added amount. The IRS calls it "imputed income". There is no imputed income tacked on to the paychecks of married, heterosexual employees. Sections 105 and 106 of the Internal Revenue Code exempt married couples. The federal Defense of Marriage Act makes it clear that "imputed income" will continue to be taxable for gay/lesbian employees.
While the Defense of Marriage Act may prevent federal marriage benefits from applying to same-sex couples, DOMA will assuredly be challenged in court. Only an Amendment to the U.S. Constitution can prevent what our opponents call ?an activist court?. The attempt to pass a Constitutional Amendment in the U.S. Senate continues to fail.