some important info in this article about equalizing assets
Married Gay Couples "Refuse to Lie" on Tax Forms - NYTimes.com: "- Sent using Google Toolbar"
By TARA SIEGEL BERNARD
Courtesy of Equality Florida The “Refuse to Lie” campaign was created gay activists who believe that the federal government should acknowledge same-sex marriage.
What if You're Gay - Your Money - Bucks Blog - NYTimes.com
Some same-sex married couples are refusing to file their federal tax returns separately this tax season, as part of a movement demonstrating that they’re no longer content to quietly comply with the federal law that does not recognize same-sex marriage. And in some cases, these taxpayers will pay Uncle Sam more when they do so.
Same-sex couples who have married, or who have a legal status equivalent to marriage in certain states, must still file separate federal returns because the government — and therefore the Internal Revenue Service — defines marriage as a legal union between a man and a woman.
Using that definition, federal tax returns ask taxpayers to check one of five options under their filing status: single, married filing jointly, married filing separately, head of household or qualifying widow(er) with dependent child. Married same-sex partners typically file their own federal returns either as single or, if they qualify, as head of household, which has more favorable rates than the single filing status.
But many same-sex couples contend that filing as single amounts to lying about their marriage status, and that’s the message behind the “Refuse to Lie” campaign created by gay activists, which is timed to coincide with tax season.
“More people are refusing to lie on those forms, even though the government is telling them to,” said Nadine Smith, executive director of the gay, lesbian, bisexual and transgender advocacy group Equality Florida, who plans on filing a joint return with her wife, Andrea. “It would be both dishonest and deeply humiliating to now disavow each other or our marriage and declare ourselves single on our tax form.”
Nina E. Olson, the national taxpayer advocate who acts as an ombudsman for the I.R.S., acknowledged the uncertainty surrounding federal taxation of same-gender spouses in an annual report to Congress. In the report, she said that taxpayers may take a filing position without penalty if there is “substantial authority” to do so, such as a court case that hasn’t been overruled by the United States Court of Appeals. And there happen to be two such cases, which are currently on appeal.
In July 2010, the Federal District Court in Massachusetts declared the Defense of Marriage Act — the federal law known as DOMA that defines marriage as between a man and a woman — as unconstitutional in two cases. They are now being appealed in the First Circuit. “Thus, there may be substantial authority for same-gender spouses to take certain tax positions as married as long as the Massachusetts district court’s opinions stands,” Ms. Olson said in the report.
The “Refuse to Lie” Web site warns same-sex couples of the risks of filing jointly, and explains different options to both adhere to the law while expressing that they disagree with it. One way to do that would be to put an asterisk by the “single” box, and then indicate at the bottom of the tax form that you are “only single under DOMA.” Another option, the site says, is to attach a note with a similar message.
The campaign also explains on its Web site how to file a joint return while avoiding penalties. In the first method, each partner would file their own single return and include an attachment stating that they’re married, and then file an amended return jointly. “Once the I.R.S. rejects the amended return, or if six months passes and they do nothing, the taxpayers who file an amended return have the right to file suit in Federal District Court claiming the refund,” the activists’ site said, adding that this option would avoid penalties because your original return would be filed according to the law.
Another method suggests filing two returns: one filed jointly (and showing the tax due on the joint return) and one filed as a single taxpayer (showing the tax due on that return). Pay whatever is due on the single return — which means you will not have underpaid — and then ask the I.R.S. which return to accept. But if the I.R.S. accepts the joint return and issues you a refund, “there is no way to know what will happen if you are later audited,” the site said.
“People who follow this example need to do so with a clear head about the decision they are making and that what could happen is unclear,” Ms. Smith, of Equality Florida, said. “It’s not without risk.”
But there’s another way to preserve your right to collect any refunds due to you if the law is eventually struck down. Patricia Cain, a professor at Santa Clara Law and an expert on sexuality and federal tax law, said that couples who would benefit from a joint filing — that is, couples who would pay less in taxes or receive refunds — can file a protective claim using I.R.S. Form 843. (File separate returns in accordance with the law, then attach the form to an amended joint return).
“If you state on Form 843 that your claim is based on the unconstitutionality of DOMA, which is an issue pending in current litigation, it is more likely that the I.R.S. will do nothing until the issue is finally determined,” she added. “And if DOMA is struck down as unconstitutional, you should be entitled to the refund on the amended return.”
Although she generally recommends that same-sex married couples file their own returns in accordance with the law, she said that couples living in Massachusetts might be able to better justify filing their returns jointly because of the two court cases there.
“The question is whether that is sufficient as substantial authority to avoid being assessed penalties if you were audited by the I.R.S. and found to have filed incorrectly,” Professor Cain said.
She also said that she knew some same-sex couples in several different states who had filed joint returns and received refunds. “It’s because the returns are handled by machines,” she said, adding that the 1040 forms don’t have any gender markers on them. “That doesn’t mean they won’t be audited sometime. But honestly, I think the I.R.S. has bigger fish to fry than figuring out where same-sex couples filed jointly.”
Taxpayers who don’t pay the proper amount of tax will be levied a 20 percent penalty on top of the amount of tax owed. An I.R.S. spokeswoman said the agency followed the federal Marriage Act and declined further comment.
But for Kate Kendell it’s about more than the money. Ms. Kendell, executive director of the National Center for Lesbian Rights, said she and her wife, Sandy, who have been together for 18 years and have two children, are going to file as married this year (they married in California during the brief window in 2008 when same-sex marriage was permitted there).
“As a lawyer and a legal advocate for the L.G.B.T. community, I am often in a position to advise people to exercise great caution and to comply in most cases with the letter of the law, even when that means denying who we are,” she said. “This is my small way of saying, where we can, we are not going to play the game anymore.”
In their case, the move is going to cost the couple more than $5,000.
If you’re part of a same-sex couple and would like to file jointly, how far would you go to show that you disagree with the current law? And what does everyone else think about this effort?
Tuesday, April 5, 2011
some important info in this article about equalizing assets
Posted by Michael at 2:06 PM