Over 100 Years of Exclusion: Lack of Tax Benefits for the LGBTQ Community
1913 Since 1913, the federal income tax system has incorporated credits and deductions that incentivize marriages and families. So what does this mean for members of the LGBTQ community, who often can’t form legal ties to their family members? Although recent court cases have attempted to include members of the LGBTQ community, many are unable to access the benefits all other Americans freely enjoy. Because tax is confusing and because there are many questions and little access to information about tax for LGBTQ people, here are some tips!
1948 In 1948, married opposite-sex couples were allowed to add together their incomes and file a tax return jointly. It took 65 years for same-sex couples to receive this benefit, when the IRS ruled that legally married same-sex couples would be treated as married for federal tax purposes, regardless of which state they live in. Now, with the recent Supreme Court decision striking down bans on same-sex marriage as unconstitutional, same-sex marriages must be recognized nationwide. Unfortunately, this still leaves out couples in registered domestic partnerships, civil unions, and other relationships. State and federal governments refuse to recognize these relationships as deserving of the same benefits and protections as those surrounding marriage.
1975 In 1975, the Earned Income Tax Credit (EITC) was created to help working low-income families, and it has become one of our country’s greatest tools in reducing poverty. In 2013 alone, it lifted over 6.5 million people out of poverty. EITC is especially important in the LGBTQ community because we are much more likely to live at or near the poverty line than the general population.
- Transgender individuals are four times more likely than the general population to have a household income of less than $10,000/year and twice as likely to be unemployed.
- LGBTQ women are among the most at risk of poverty in the US. About 30% of bisexual women and 23% of lesbian women live in poverty, compared to 21% of heterosexual women.
- Women of color in same-sex couples are two to three times more likely to live in poverty than white women in same-sex couples.
Unfortunately, many LGBTQ people are still denied access to these benefits simply because of who we are and who we love. Because only married couples can receive these benefits, couples in other types of relationships are intentionally disqualified. Also, because LGBTQ people often have difficulty forming legal relationships to their children, they may lose out on thousands of dollars of EITC.
1976 In 1976, the Child and Dependent Care Credit was established, which allows working families to claim credits for a portion of their child care expenditures, and in 1997, the Child Tax Credit was passed, which helps families offset the costs of child-rearing. Opposite-sex parents have received thousands of dollars a year from the federal tax system to help with child-rearing costs, while same-sex parents are continually excluded. In order to claim these tax benefits, the child must be the taxpayer’s child or stepchild. A majority of states, however, have barriers that restrict same-sex parents from adopting children. Since most states do not have specific laws indicating whether same-sex couples may adopt, states give agencies the power of discretion, which often leads to them refusing same-sex joint adoptions. Some states do not allow unmarried couples to adopt, so people in same-sex relationships often have to adopt as a single parent.
1997 The Adoption Credit was also added in 1997 to allow families to receive a tax credit for legal costs and other costs incurred from raising an adopted child. This benefit, however, is inaccessible for same-sex parents who adopt their spouse’s child. Consequently, many same-sex couples postpone marriage plans and are barred from receiving the same federal tax benefits opposite-sex parents receive.
It’s pretty clear that these tax benefits and credits are an amazing way to help families in financial crises. However, the federal tax system, benefiting those in so-called “traditional” marriages and families, still serves mostly opposite-sex couples and their families. There are over 1,000 benefits, rights, and protections in federal law afforded to married people. But those who can’t and don’t participate in this traditional notion of family and marriage are effectively punished for failing to conform to the stereotypical notions of family. It’s time to start seeing LGBTQ families as contemporary families – families that matter.
So what are some ways we can improve the federal tax system to better serve LGBTQ people? Here are some ideas:
- Focus on the parenting relationships between same-sex parents and children rather than their legal relationships, and allow same-sex parents claim their children
- Open up the option to file jointly for couples that are not legally married
- Allow younger same-sex couples without children to receive EITC benefits
Feel free to comment with any other ideas!
To get involved, visit: http://www.queerourtaxes.org/
For more information about taxes for LGBTQ, check out this fact sheet!
By National LGBTQ Task Force Holley Law Fellow Taissa Morimoto