The Internal Revenue Service often finds my family confusing, and this year is no exception.]
Our federal pen pal recently wrote to my spouse Joyce, fuming that she had failed to declare $1,267 in interest on her last year’s tax return. “You Must Return the Response Form by April 7, 2010,” the letter warned.
The prospect of severe penalties was leveled at poor Joyce, guilty of nothing more than being a woman happily married to a woman.
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Because of the cynically named Defense of Marriage Act, the federal government doesn’t recognize our marriage, solemnized by Canada in 2003. Each tax season, Uncle Sam requires Joyce and me to lie and say we are single when Joyce prepares our taxes. The result often is that the IRS and Joyce find themselves back in what we call the “oh, never mind then” ritual.
She’ll write back to explain that the $1,267 in interest was on a joint account — our money is mingled — and that I properly declared the interest on my tax forms and paid the taxes. The IRS will say, “Oh, never mind then.”
For us, tax season is an annual red flag reminder of the annoyances, insults and dollars-and-cents consequences caused by DOMA, the reality-defying law that Washington politicians have put no deadline on erasing.
The dollars-and-cents impact in our case stems from my being on Joyce’s workplace dental and vision plans. Because of DOMA, the contribution that Joyce’s employer makes toward those benefits counts as taxable income for Joyce. In other words, what for her married heterosexual colleagues is an untaxed spousal perk is taxable income for us. The tax isn’t a lot, since the benefit is only $220 this year. The tax would skyrocket if I were on Joyce’s primary health plan. And that’s the reason I stay on my employer’s plan, even though hers has more attractive bells and whistles.
Congress and the White House took a pass at fixing this particular inequity during the health care overhaul: The original House-passed bill would have ended taxation of partner benefits. But lacking a persistent champion in a very high place, the correction didn’t get included in the final bill.
Lesbian, gay, bisexual and transgender taxpayers have progressed this year, though:
- In a landmark decision this February, the U.S. Tax Court ruled in O’Donnabhain v. Commissioner of Internal Revenue that treatments for gender identity disorder, such as surgery and hormonal injections, are generally deductible medical expenses. The IRS had branded Rhiannon O’Donnabhain’s sex reassignment surgery “cosmetic,” but the tax court disagreed, allowing most of the male-to-female American’s requested deductions.
- As of this year, all “non-spousal” beneficiaries — including surviving domestic partners, lesbian widows and gay widowers — can roll over an inherited 401(k) account into an IRA savings account rather than having to cash it in and immediately pay taxes on all of it. The tax treatment is still less favorable than what recognized spouses receive, but it’s a step in the right direction.
Meanwhile, my journey with Joyce through legal limbo took a promising turn when the attorney general and governor of our home state, Maryland, said same-sex marriages performed elsewhere are valid under state law.
So, Joyce got into an email back-and-forth with Maryland’s tax agency in trying to figure out whether we can begin filing our state income taxes as the married couple we are.
“At the present time for the tax year of 2009 and prior years, we do not recognize this union for filing purposes,” a worker in “taxpayer services” replied. “It may be allowed for the tax year of 2010, but we have had no confirmation of this yet.”
Eventually, reality will win these struggles. And then paying what we owe won’t be quite so taxing emotionally.
Deb Price of The Detroit News writes the first nationally syndicated column on gay issues.