IRS to Gay newlyweds: not so fast

Windsor (right) says that the IRS owes her $ 363,000 Brendan Hoffman/Getty Images

By Andrew Zajac

For this same-sex newlyweds in New York, Lawrence s. Jacobs has a message: enjoy the Champagne and the honeymoon, but don't expect gifts from the IRS. Jacobs, a lawyer in Washington, specializing in estate planning for same sex couples — and in delivering the bad news that their unions are not legal in the eyes of the IRS, a policy that them time and money costs during the tax season.

Same-sex couples in Washington, which last year legalized gay marriage, should a federal return to creating calculations necessary for their joint D.C. return filling. But then they have to set work aside and fill separate federal return because the IRS does not consider their Union as legal, Jacobs says. "You have to get your marriage recognised for decades and now the feds," no, you're not, "say," said Jacobs, who as a partner in a gay marriage first hand experience of the problem.

This difficult process applies to all married couples of the same sex in the US comes courtesy of the Defense of Marriage Act, or DOMA, which marriage as "a legal Union between one man and one woman as husband and wife." The Obama administration, say that Doma is unconstitutional, has instructed federal agencies to do what they can under existing legislation to extend benefits to homosexual partnerships. This line not far-stretching with the IRS, said Brian Moulton, a lawyer with human rights campaign, a Washington gay rights advocacy group. "There is a relatively small space before you against DOMA shot," he says. "I don't think there's much that can do." The IRS declined to comment.

Filling out a "dummy" federal return can add $ 300 to $ 400 to a same-sex married couple tax preparation invoice, according to Larry Rubin, a partner at accounting firm Aronson in Rockville, MD., as a result of DOMA, homosexual couples also pay income tax on a portion of the employer-provided health insurance, which is not taxable to heterosexual married couples.

The most expensive possible result of the IRS treatment of couples of the same sex implies the estate tax. A heterosexual man or woman can generally accept any amount of money or property of his or her spouse without paying taxes. A spouse of the same sex to seize a large estate, on the other hand, the head of a tax paying a whopping 35% on anything over $ 5 million. This situation encouraged a New York widow, Edith Windsor, to sue the Government last November to get the IRS to return $ 363,000 taxes on a legacy of her husband, the WCO, Thea Spyer. Windsor is working with Senator Kirsten Gillibrand (D-n.Y.) and other lawmakers to DOMA. "It is a matter of basic fairness," said Rose Saxe, a lawyer with the American Civil Liberties Union, which contributes Windsor represent. "The Government should not be exclusive to one group of married couples of this important protection."

The bottom line: Even when they can marry, gays face disadvantages such as higher estate taxes and tax-prep costs $ 300-$ 400 more than straight couples.

Zajac is a reporter for Bloomberg News.