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3 Reasons Same-Sex Spouses Will Hate IRS Marriage Equality

Last week, the IRS ruled that all same-sex marriages will be recognized for federal tax purposes, following up on June's Supreme Court striking down provisions of the Defense of Marriage Act denying same-sex couples federal recognition of their marital status. Many same-sex married couples applauded the move, arguing that it's one more step toward full recognition of their marriages.

Yet for some same-sex couples, being treated as married for federal tax purposes could actually increase their tax bills. Let's take a look at some of the negative implications of the new IRS policy from the standpoint of same-sex spouses.

President Obama talking to plaintiff Edie Windsor after the Supreme Court ruled in her favor by striking down the Defense of Marriage Act. Source: White House.

1. The marriage penalty will hit many same-sex spouses, especially those with roughly equal incomes.
The IRS ruling will force same-sex spouses to face the same apparent inequities as their married opposite-sex counterparts. Under certain circumstances, federal tax law imposes higher total taxes on married couples than they'd have to pay if they could each file as single individuals. Especially with higher-income couples, threshold limits for higher tax rates often start at far less than double the corresponding limit for single filers, leading to bigger tax bills. In addition, married couples who file separate tax returns often face limitations and restrictions on deductions that single filers don't. With several new provisions taking effect this year, including the Medicare surtax and the return of the 39.6% tax bracket on the highest-income earners, many same-sex spouses will have to pay more in tax because of the ruling.

2. Same-sex spouses will lose access to benefits available to single filers.
In addition to the marriage penalty resulting from treatment of income and deductions, same-sex spouses will find themselves missing out on certain provisions that they qualified for as single individuals. For instance, the Earned Income Tax Credit provides a refundable credit to low-income individuals, with benefits for those with three or more children amounting to as much as $6,044 for 2013. As single filers, one member of a same-sex couple with relatively low income could claim the credit even if the other member had large amounts of income. But under the new rule, joint filers would have to take both spouses' earnings into account, thereby disqualifying some same-sex couples from taking the credit. Other similar impacts could occur for deductions and credits that rely on income limits for eligibility, including tax breaks for education expenses and the child tax credit.

3. Tax laws affecting divorce will give same-sex spouses more to fight over.
Entering a marriage has major financial implications for couples, but so does dissolving a marriage. With the IRS ruling, same-sex spouses will have to deal with the tax laws governing divorcing couples if they decide to split up. In general, a spouse who pays alimony is entitled to a tax deduction for the amount paid, and the spouse who receives alimony payments must include them as income. By contrast, amounts characterized as child support, as well as certain other types of property settlements, aren't treated as alimony and therefore don't have an income tax impact on either spouse. Because divorcing spouses have some leeway in agreeing whether particular asset transfers get treated as alimony or not, the tax issues can become contentious during divorce proceedings. Same-sex spouses will now have to face those same issues if they choose to divorce.

Weighing the costs and benefits
With the IRS ruling, all couples considering marriage will now face the same financial conundrum in deciding whether their tax bills will go up or down as a result or their nuptials. Same-sex couples need to consider both the benefits and the pitfalls of married filing status in evaluating whether tying the knot makes good money sense.

The tax increases that some same-sex spouses will face are just part of a larger increase that took effect at the beginning of 2013 and affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2013, at 11:10 AM, Erford1856 wrote:

    Reasons You Should Oppose "Same-Sex Marriage:"

    1. Homosexuality and same-sex behavior is partially due to cultural influences, like "gay marriage." This means homosexual behavior will be more frequent than now, especially since marriage encourages the dating that precedes it.

    2. Homosexuals are far more prone than heterosexuals on a per person basis to serious disease and/or bodily damage, such as HIV/AIDS to which gay men are 44 times more likely to contract than straight males, according to the Centers for Disease Control.

    3. Both sexes experience greater rates of mental and emotional maladies, even in countries like the Netherlands, which is highly accepting of homosexuality.

    3. Same-sex relationships are fleeting and unstable, even if they're "married." in the overwhelming majority of cases, gay men remain non-monogamous, even if they're in "committed" relationships and both sexes are from 1.5 to 3 times more likely to divorce than straight couples.

    4. Children of gay parents are more likely to either engage in same-sex activity or consider having a same-sex relationship, themselves.

    These are just a few of the reasons why "gay marriage" is a harmful and damaging concept. To read more, google the short essay, "The Case for Limiting Government Recognition to Traditional Relationships," which is a summary of peer-reviewed studies that confirm the problems described above. A list of these studies is at the end of the essay.

    Then pass it on to as many as you can and ask that they do the same, using comment strings, email, facebook, etc. If we all implement this simple step, we can overcome the media bias favoring "gay marriage" and keep marriage in its only healthy and beneficial form: between one man and one woman.

  • Report this Comment On September 01, 2013, at 11:18 AM, fishingapplefox wrote:

    Rom 1:26 God let them follow their own evil desires. Women no longer wanted to have sex in a natural way, and they did things with each other that were not natural.

    Rom 1:27 Men behaved in the same way. They stopped wanting to have sex with women and had strong desires for sex with other men. They did shameful things with each other, and what has happened to them is punishment for their foolish deeds.

    Rom 1:28 Since these people refused even to think about God, he let their useless minds rule over them. That's why they do all sorts of indecent things.

    Rom 1:29 They are evil, wicked, and greedy, as well as mean in every possible way. They want what others have, and they murder, argue, cheat, and are hard to get along with. They gossip,

    Rom 1:30 say cruel things about others, and hate God. They are proud, conceited, and boastful, always thinking up new ways to do evil. These people don't respect their parents.

    Rom 1:31 They are stupid, unreliable, and don't have any love or pity for others.

    Rom 1:32 They know God has said that anyone who acts this way deserves to die. But they keep on doing evil things, and they even encourage others to do them.

  • Report this Comment On September 01, 2013, at 11:39 AM, Lenohere wrote:

    They wanted to have the same benefits and to be recognized equally as non same sex couples and now they have it all, the good and the bad that comes with it. Now they get to pay just like everyone else.

  • Report this Comment On September 01, 2013, at 11:55 AM, sabebrush6 wrote:

    A. Back off and let those men who want to marry men, marry men.

    B. Allow those women who want to marry women, marry women.

    C. Allow those folks who want to abort their babies, abort their babies.

    D. In three generations, there will be no Democrats.

    I love it when a plan comes together!

  • Report this Comment On September 01, 2013, at 2:45 PM, deniserk wrote:

    Equality means having the same options. The marriage penalty will apply equally to all married couples just as the marriage benefits do. Just like straight couples, gay couples now have the *option* of getting married or not getting married. Some people have chosen not to marry for financial reasons. This is now a choice for all, not just some.

  • Report this Comment On September 01, 2013, at 4:31 PM, linette1234 wrote:

    Psalms 119:133 ¶Order my steps in thy word: and let not any iniquity have dominion over me.

    Psalms 19:13 Keep back thy servant also from presumptuous sins; let them not have dominion over me: then shall I be upright, and I shall be innocent from the great transgression

    Prayer For the Salvation of the Nation

    Father, hear our prayers for the salvation of the nation. Grant Mercy to all souls that turned away from you. Open their hearts and minds with Your light. Gather your children from the east and the west, from the north and the south. Have mercy O God on those who do not know You. Bring them out of darkness into your light. You are our saving God who leads us in our salvation. Protect us from evil. Bless and praise You O Lord, hear our prayers and answer us. You, our Savior, are the hope of all the ends of the Earth and the distant seas. May Your way be known upon Earth; among all nations Your salvation. We put the nation in Your hands; and pray that they will be turned from the pathway of damnation through Jesus Christ, our Lord.

  • Report this Comment On September 01, 2013, at 4:51 PM, graverobber77 wrote:

    One of the drawbacks of getting what you want. I always figured gays had the best of both worlds. They could have their "unions" with none of the drawbacks of marriage because they weren't really recognized by anybody. All they had to do was say I'm out and it was all good. Now they can look forward to divorces and marriage penalties. Congratulations, now you can be as miserable as us straight couples.

  • Report this Comment On September 03, 2013, at 1:16 PM, Johny205 wrote:

    Let them get married, so they can be as miserable as the rest of us!

    Obviously the majority of the country doesn't give a rats ass what these bible banger's think about gay marriage.

  • Report this Comment On September 03, 2013, at 4:49 PM, Rileysdtr wrote:

    Not sure why I bother but... here goes.

    In response to Erford1856's unique "use" of statistics -

    1. Please do not confuse homosexuality with homosexual behavior. One is inborn; the other an action... Homosexuality is most assuredely NOT due in large part to cultural changes. Homosexual behavior may be. "Marriage encourages the dating that preceeds it" is flawed logic.

    2. Just love this one. If you're flinging health statistics, numerous CDC studies show that lesbians by far have the lowest incidence of HIV/AIDS, along with syphillis, gonnorhea, likelihood of violent crime, and virtually every other health condition or concern other than those that cross every strata of society, e.g. heart disease.

    3. Cultural factors play a role regardless of acceptance/tolerance... religion, family values, etc. When a young adult decides death is better than gay that is certainly an emotional "malady" but let's consider the root. I hope your children turn out the way you expect them to, but as the father of young adults, well, mine didn't. They're all straight (that I am aware of) and I thank God for that not because I would not love my kids regardless, but because he might kill himself beforeI could tell him so.

    FYI Great article today about the high incidence of suicide in South Koeran high school students due to gruesome stressors over highly competitive college admissions. Don't know how many are gay v straight.

    3. (again) got a source there, Buddy? Only info I can quote is anecdotal - my friends in gay relationships are just as stable as my friends in straight ones... almost 50 years for my elderly gay neighbors.

    As gay marriage is just reaching a sort of broad spectrum for statistical analysis, the "1.5 to 3 times" (assuming any statistical significance) should be run against straight non-married couples to as closely as possible to align like-to-like.

    4. Leaving alone any "so what?" comments, children of homosexual couples may be less likely to broadly reject the concept out of hand. My kids may be more "likely to consider" a same-sex relationship because they have dearly-beloved aunts who are openly gay, and who they have known and loved since toddler-hood. Don't know (and again - source for these statistics?) At least they are LESS likely to consider beating the crap out of the smallest kid in class while yelling F@g at him.

    Here's the bottom line - I don't think my sister could be happy married to a man any more than I could... it is intrinsic. I'm happy for her and her 18-year relationship; am less anxious these days she will be the victim of a hate crime as society's tolerance level goes up; and when she can finally get married in our state look forward to passing along any wisdom I've built up over the years doing the taxes for my own family.

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