Want a Bigger Tax Refund? Five Things That Made Tax Filing Better for Many LGBT Families This Year, and Two Changes We’re Asking the IRS to Make for Next Year
The Supreme Court’s decision in United States v. Windsor rocked the tax-filing world of same-sex couples this year. Here are the top five things that put more money in some of our pockets:
- Joint Filing for Married Couples! We can’t express what a huge change this was for married same-sex couples. After the IRS announced that they would accept joint returns from married same-sex couples, the tax team at the Task Force crunched some numbers. Especially for single-earner and low-income couples, filing jointly on your federal tax return could mean thousands of extra dollars in your return.
- Tax-Free Health Insurance! Before Windsor, if your employer offered health insurance benefits to you and your spouse, your insurance costs wouldn’t be taxed, but your spouse’s would be. This year, folks who have been paying tax on those benefits will see a nice chunk of that tax refunded to them.
- Estate Tax Reduction! What the heck is an estate tax? Basically, before Windsor, if your spouse passed away, you might have to pay income tax on any money or property they left you in their will. This year, the IRS treats married same-sex couples the same as married different-sex couples, so anything inherited from a spouse is tax-free.
- Fairer Access to the Earned Income Tax Credit! Allowing married couples to file jointly means that some families that couldn’t claim the Earned Income Credit in the past now have access to it. In 2012, the Earned Income Credit lifted about 6.5 million people out of poverty, including about 3.3 million children.
- Deductions for Retirement Savings! The IRS allows most people who contribute to an IRA to claim a deduction for that contribution on their tax return, effectively making saving for retirement cheaper. Married couples can basically take deductions for contributions made for a non-working spouse, making their tax return larger. This year, same-sex couples have access to that retirement savings boost.
That sounds great! Of course, filing jointly isn’t great for everyone. For some couples, tax refunds get smaller instead of larger when you file jointly. You should talk to your tax accountant to find out the right move for you. The good news is, Windsor makes it a little bit easier for our community to be able to make the right decisions for our families and our wallets.
Unfortunately, there are still hundreds of thousands of LGBT families who don’t have access to these tax benefits, because their families aren’t recognized by their state or by the IRS. That’s why we’re launching a campaign today to fight for TAXATION WITH LGBT REPRESENTATION. We’re asking the IRS to let us do two things:
- File as Families: We want the IRS to create a new filing status that recognizes all of our families, and allows them to accept joint tax returns from couples who aren’t legally married. Access to credits and deductions shouldn’t depend on whether your State believes your family deserves recognition.
- Claim our Kids: Many of us can’t form legal relationships with our children because of discriminatory state legislation. Because we lack legal status as a parent, we can’t claim our kids for certain credits and deductions. That just isn’t fair. We want the IRS to designate a new dependency category, called “Dependent for Tax Purposes,” so that we can claim our kids even if we live in a state that won’t let us adopt them.
Join Us Today as we ask the IRS to QUEER OUR TAXES. Visit www.queerourtaxes.org to sign the petition, and we’ll send you a “Taxation With LGBT Representation” sticker that you can use to show your support!