Guest blog posts / News & Politics / Sex & relationships

The Absolute Truth of Love, Death, and Taxes According to the IRS

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PHOTO CREDIT: CHRIS KIRZEDER

Guest author Jerry Capell lives in Chicago with his Partner of 17+ years and two children.  On those rare occasions when he is not threatening his children with bodily harm, he is the CEO, President and co-founder of Urban Renovators.

 

My partner Kevin and I have been talking about getting married lately.  We live in Illinois, where we are oh-so-close to marriage equality.  It was a bit of a surprise this morning then when I received an email from my banker at Northern Trust with the subject line, IRS Grants Federal Tax Benefits to Same-Sex Couples”.[1]

Reading on, I was delighted to see that,

Legally married same-sex couples are now entitled to all the federal tax benefits offered to opposite-sex couples, whether the state where they reside recognizes their marriage or not. This includes the ability to file federal tax returns jointly, and the ability to transfer unlimited assets between spouses – during life and at death – free from gift and estate taxes.

Wow, this is a big deal.  Now we don’t have to wait for Illinois to get its act together—we can go to D.C., New York, Massachusetts, Vermont or any of the other states which have achieved marriage equality, and the Feds will allow us to file as Married Filing Jointly.  This is particularly beneficial for partners who have widely different levels of income as it could reduce tax liabilities materially.  It also means that the Feds will recognize your marriage, even if it took place outside of your state of residence, for purposes of estate taxes.  In other words, your estate, should you–well you know, will pass to your husband or wife without estate taxes.  Big, big deal.

Two quick cautions:

1) States which do not recognize same sex marriages will still require you to file state tax forms separately.  Do not expect any immediate changes in, for example, Arkansas.

And

2) Recognition by the Feds does not extend to Civil Unions or Domestic Partnerships—at least not yet.

For those who appreciate a bit of irony for amusement’s sake, this change will apply to those couples residing in say, Alabama or Utah or Mississippi, as long as their marriage takes place in a state (or the District of Columbia), which recognizes same sex marriage.  I have no doubt that Pat Robertson’s head is exploding as I write.  Makes me very happy.

 


[1] John W. McGowan, CFP®
Senior Vice President | LGBT & Non-Traditional Family Practice | Northern Trust

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4 Comments

  1. Thank you so much for this, Jerry. I was dumbfounded when I read the headline in the NYT last night (“Gay Marriages Get Recognition from the IRS”). I even read the first two paragraphs out loud to my partner.

    For lovers of primary source documents (what? I can’t be the only geek around here, can I?) here’s the IRS statement, whose title is almost as long as the statement itself, making me think I may have missed my calling as an IRS statement titler: “Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples.”

    Yep, that’s just the title of the statement. But a pretty nice title it is.

  2. Tickled pink by the news but mostly I love that your bank emailed you! What a bank.

    Thanks for the info.

    • I was amazed by that bit, too! Maybe we need to run a piece about queer-friendly/queer-supportive financial institutions.

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