Each tax season long-time partners David Bloom and Damian McNamara come face-to-face with a double standard.
Even
though they've been together 23 years, have two kids and a house, they
can't file a joint tax return like married heterosexual couples.
McNamara has to pay taxes on his employer's contributions to Bloom's
health insurance.
Federal laws don't recognize same-sex marriage,
even as the number of states recognizing the unions grows. So McNamara
and Bloom and other couples are at a tax disadvantage to their married
heterosexual peers. They also face economic challenges when it comes to
health insurance, Social Security benefits, estate taxes and retirement
funds.
If Bloom and McNamara were legally married in another
state, their union would not be recognized under the federal Defense of
Marriage Act and Florida's Amendment 2
McNamara pays about $1,600 a
year in federal taxes for Bloom's health insurance. Their kids are
covered by McNamara's health insurance as any other parent's would be.
Each
year, the couple must figure out how to divvy up deductions on their
federal taxes, such as for their children and interest on their
mortgage.
"You learn how to adjust and how to deal with it," said
Bloom, who owns a PhysicalAdvertisingWorks.com, a promotions company
that operates in Broward and Miami-Dade counties.
In Lake Worth,
Robert Telford, who works for the city of West Palm Beach, said about
$200 in taxes is withheld from his paychecks every month to pay for a
portion of his partner's health insurance.
"I am feeling the bite
out of my wallet every month," said Telford, a broadcast coordinator,
who has been with his partner, Jim Schramm, for 17 years. "I could not
imagine those who make around $30,000 and want to provide this supposed
benefit to their partner. They couldn't."
Telford said he
struggling since he hasn't had a raise in four years and has to take
five furlough days without pay this year to help with the city's budget
woes.
Heterosexual couples who aren't married face the same
challenges, but they have the option of marrying and getting the tax
benefits afforded married couples who file one combined tax return.
There are more that 21,000 same-sex households in South Florida,
according to the 2010 Census.
Same-sex couples are not allowed to
file jointly. As a result, they can face thousands of dollars more in
taxes each year, said Gil Charney, a tax analyst with H&R Block
Inc.'s Tax Institute, the tax-prep company's independent research and
analysis division.
Take a married gay couple with two children. If
they claim two dependents, have combined salaries of $100,000 and one
of them files as a head of household and has the partner on an
employer-supplied health-insurance plan at a cost of $5,000, the
couple's tax liability will total $15,199, Charney said. But a married
heterosexual couple with two children, the same income and benefits
would have to pay only $10,656 on a joint tax return, Charney said.
"The whole tax code doesn't take into account the families created by gays and lesbians," said Rand Hoch, president of the Palm Beach County Human Rights Council.
The
benefits enjoyed by married heterosexual couples extend even into
death. Assets left behind by a husband or wife who dies are absorbed by
the surviving spouse tax-free, said Charney. But when one of two
same-sex partners dies, the surviving partner must pay taxes on the
assets above a certain exempt amount.
Now the federal estate-tax
exemption covers the first $5.1 million of a person's estate. Next year
the exemption is scheduled to drop to $1 million, according to the
Internal Revenue Service.
Retirement funds also are problematic,
Charney said. In the case of a heterosexual marriage, the individual
retirement account of a deceased partner automatically becomes the
property of the surviving spouse, who has the option of deferring
payments from the account until the survivor reaches 70-1/2 years old.
But in a same-sex partnership, the non-spouse beneficiary must start
withdrawals immediately, missing out on interest that could have
accumulated if the account had remained untouched.
Charney said
that ultimately means smaller retirement funds for surviving partners.
They also do not get Social Security benefits if their partners die.
"That's
a huge vulnerability," said Stratton Pollitzer who lives in North Miami
and is deputy director of Equality Florida, the state's largest civil
rights group for the lesbian, gay, bisexual and transgender community.
Some
same-sex couples are choosing to check the "married" box on federal
income tax returns and file jointly instead of reporting their status as
single on separate returns, said Nadine Smith, executive director of
Equality Florida.
"The government should not be in the position to
make people lie about their marital status," Smith said. "This is money
that could go toward educating our children, buying homes, starting a
business."
Charney warned that a same-sex couple filing a single
federal return as a married couple could be liable for additional taxes,
penalties and interest — and could be subject to further scrutiny from
the IRS.
Filing separate returns is no guarantee that same-sex couples won't draw attention from the IRS.
Lesley
A. Northrup, dean of The Honors College at Florida International
University, had always split tax deductions and dividends on joint
investments with her partner.
"Oddly enough, after 15 years of
filing that way, the IRS for the first time last year questioned the
splitting of our mortgage deduction," Northrup said in an e-mail.
It was "quickly resolved with a copy of the statement listing us as joint owners, but [it was] still weird," she said.