>, News, Taxes, Uncategorized>New York’s Marriage Equality Act—Should We Get Married?

New York’s Marriage Equality Act—Should We Get Married?

By Dave Spaulding and Jay Freeberg, Janover LLC

“Should we get married?”

INSERT CAPTION HERE.

Since June 24th’s dramatic vote in Albany, this is the question everyone is asking. What a difference a few weeks make—earlier in June, when Gov. Cuomo introduced New York’s same-sex marriage bill, there was little belief that it would even be brought to a vote, let alone have a sufficient number to become law. Many activists simply had hope and the slightest bit of faith.

Two weeks later, the dream became reality. Now, the coupled but hitherto unmarried are free to legally ask that question. If couples have not planned properly, however, they may hear some say, “Be careful what you ask for.”

Beginning July 24, same-sex couples obtained a lot of new rights, including employer health benefits, easier inheritances, and a host of state tax breaks. Federal recognition was not part of the vote, however, leaving benefits like Social Security out of reach for same-sex couples.

As tax advisors and counselors for many domestic partners in the metropolitan area, we’re hearing this question from our New York clients with more than just curiosity this week. The reality of marriage when talking taxes is a sobering discussion. It’s similar, of course, to the discussion that opposite-sex couples face when they are about to marry, with one major exception—same-sex couples will only be considered married at the state level. For federal purposes, same-sex couples are still considered unmarried and must file as single taxpayers.

What, then, is at issue? Well, there’s the graduated nature of tax rates at the state level. As you add the second partner’s income, the additional income is taxed at higher rates than it might have been if each partner were to file as a single individual. There’s the definition of marriage—when is a marriage not a marriage? In New York, same-sex marriage is now a matter of law—the Marriage Equality Act. In neighboring Connecticut, civil unions that were not dissolved or annulled by October 1, 2010 were “merged” into marriage by operation of law. Although New Jersey doesn’t recognize same-sex marriage, its civil-union laws do allow for joint tax-return filing.
The ancillary issue to consider is one’s filing status—if you are married under the law, you no longer have the choice of a “single” filing status; married individuals must file their state returns as married filing separately or jointly with their partners. Unlike Massachusetts, which pioneered gay marriage in 2004, New York has no residency requirements for obtaining a marriage license. However, if you marry in New York and you are not a resident of New York, you must still follow the tax laws of your domiciled state regarding tax-filing status.
Is this filing-status choice beneficial? Does it benefit us financially? What are the legal implications? Those are the real questions being asked. Not to be obtuse, but the answer to those questions is that it really depends. There are a number of considerations to take into account, like the family’s combined income, partners’ itemized deductions subject to limitation, partners’ itemized deductions subject to AMT adjustment, and the total principal of mortgage financing. Other considerations are dependent children, dependent-care expenses, and even educational expense deductions or credits.
As you can see, the answer to the question is anything but simple. Marriage is a wonderful and romantic step that millions of couples take each year as a natural progression in their relationships. If you are currently contemplating the “Should we get married?” question, please consult your tax advisor.
To learn more, visit the Domestic Partners Network today!

Visit www.janoverllc.com.

2011-08-24T04:15:00+00:00 August 24th, 2011|Blog, News, Taxes, Uncategorized|Comments Off on New York’s Marriage Equality Act—Should We Get Married?
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