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Brown: Tax filings might be a struggle for gay and lesbian couples

Updated: May 15, 2013 6:53AM

Monday’s federal income tax filing deadline could put anybody on edge, but for gay and lesbian couples, it can be a particular irritant.

That’s because their IRS 1040 forms spell out in dollars and cents how they are regarded as second-class citizens by the U.S. government.

Under the 1996 Defense of Marriage Act, same-sex married couples are treated differently for tax purposes from their opposite-sex counterparts.

The result is not only discriminatory; it can be downright expensive.

The most glaring example of this is the tax treatment of employer-paid health insurance benefits.

In a marriage between a man and a woman — the only kind legally recognized by the federal government — the cost of adding a spouse to an employee’s health insurance coverage is generally not subject to income taxes.

But in the case of gay or lesbian individuals receiving domestic partner benefits for their spouses through their employer, they must pay taxes on the imputed value of those benefits.

For Libby Hemphill and her wife, Naomi Goldberg, of Logan Square, that meant paying $1,800 more in federal income taxes this year than if they were a man and a woman.

For Christopher Clark and his husband, Victor Armendariz of Wrigleyville, the tax hit was closer to $3,000-$4,000 this year, owing to the higher value placed on his health-insurance benefits.

The Human Rights Campaign, advocates for LGBT Americans, pegs the average annual tax cost to a gay or lesbian couple at nearly $1,100 for this provision alone.

Because there is no automatic payroll withholding on the taxable value of the health-care benefits, many gay and lesbian couples end up having to cut a check to the IRS, said Gail Morse, a tax lawyer with Jenner & Block,

“I don’t think most people think about that,” said Rep. Mike Quigley (D-Ill), who admits he wasn’t thinking about the tax consequences either in 1999 when as a Cook County commissioner he passed an ordinance allowing gays and lesbians to register for health benefits for their partners.

For the past few years, Quigley has made April 15 an occasion to speak out against the unfair tax treatment of gay and lesbian couples, which starts, of course, with restrictions against them getting married in the first place.

“People should be able to fall in love and marry who they want,” said Quigley, who has called for repeal of the Defense of Marriage Act and now is among many hoping the U.S. Supreme Court will strike it down.

Tax injustice for same-sex couples doesn’t start or end with health insurance benefits. In fact, it probably starts right at the top of the tax form where they are prohibited from checking the box to file as married, either jointly or separately — even if they are legally married in one of the states that allow it.

That causes them to lose out on the potential advantages of joint filing that can result from blending tax rates and pooling deductions. To be fair, same-sex couples also currently avoid potential disadvantages of joint filing — such as the so-called marriage penalty that results when a couple’s combined income pushes them into a higher tax bracket. But I don’t see why that shouldn’t be their problem, too.

One of the biggest tax concerns for gay and lesbian couples is just the added confusion of trying to do it correctly.

“The amount of tax literacy a person has to have is remarkable,” said Hemphill, 32, an assistant professor of communication and information studies at IIT, who said she plans to hire someone to do her taxes next year because of the extra complications of an impending baby.

I don’t know how those who oppose gay marriage on the basis of religious beliefs can justify such real-world ramifications.

Marriage is not just a religious institution. In fact, marriage can exist wholly outside the confines of religion and nobody cares — unless the two people involved are of the same sex. Then it somehow interferes with their belief system.

In the end, though, it might be the federal estate tax, not the income tax, that brings down the Defense of Marriage Act.

One of the same-sex marriage cases pending before the Supreme Court involves a New York woman hit with a $360,000 estate tax bill on property she inherited from her lesbian partner, whom she had married in Canada. If she had been married to a man, there would have been no tax.

That disparity can’t be defended on the basis of religion.

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