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Same-Sex Families Get A New Boost From Tax Rules

Amanda Beane (top left) and Anne Bryson-Beane (top right) take their family out for a visit to Seattle's Pioneer Square. The couple benefited from new tax rules that allow them to divide their income evenly.
Amanda Beane (top left) and Anne Bryson-Beane (top right) take their family out for a visit to Seattle's Pioneer Square. The couple benefited from new tax rules that allow them to divide their income evenly.

Some same-sex couples have to file their federal income taxes in a new way this year. For some of those couples, it means they'll save a lot of money.

The gay couples who have new filing rules are same-sex spouses and registered domestic partners in "community property" states — that means they both own all of their income, no matter who earns what.

Three states extend their community property laws to same-sex couples: California, Nevada and Washington.

A Family Benefits From Tax Shift

In Seattle, Amanda Beane and Anne Bryson-Beane are raising their seven children, who were originally placed with them through a foster program.

Getting off the bus on a recent day, Beane returned home to what she calls "controlled chaos" as Bryson-Beane made dinner for the whole family.

"I take care of the kids, and you make the money, and I spend it," Bryson-Beane says.

"That's not fair," Beane says.

Beane is a senior associate at a law firm. Bryson-Beane is a stay-at-home mom. Their new tax situation, Beane says, is a small recognition of their family.

"It still doesn't really reflect that we're a household," she says. "But at least it sort of doesn't look at me as one single unmarried earner."

That's how she filed before. But now, Beane files a return for just half of her earnings. Bryson-Beane files one for the other half. It's called "income splitting" — and it puts them in a lower tax bracket.

It also makes them both eligible for tax credits they couldn't get before. The result is that they saved thousands of dollars.

"The ones that are saving the most are the couples I notice with a disparate income," says Howard Choder, the couple's tax accountant.

Confusion Over Filing, And New Rules

Choder says he has to file the new returns on paper — because no tax software is set up to handle this particular type of return yet. And the paper forms aren't set up right, either.

"But I've taken it on myself to write, in big, red, bold letters at the top of the return, 'registered domestic partnership, community income split,' " he says, along with the name and Social Security number of the partner.

For now, it works. The Internal Revenue Service has not said howto do it right; it has said that in California, Nevada and Washington, same-sex spouses and registered domestic partners must file this way.

"Some will pay, but most will benefit from this," says Laura Hoexter, a tax attorney and estate planner.

Hoexter says she had to dispel some myths when this IRS ruling came out, including the myth that same-sex couples can file jointly — they can't; or that the IRS has overturned the Defense of Marriage Act — it can't.

And Hoexter says some people may not benefit. It could mess up a financial aid package for a spouse or a child. Or, in cases where each spouse makes the same amount of money, it's a wash.

"I know it's confusing. I know it's time-consuming," Hoexter says. "But this really is a step in the right direction. Tax-wise, this treats them closer to how they're living."

Saving Big At Tax Time

Beane and Bryson-Beane saved $22,000 on their return, using the income-splitting method, Beane says.

"I thought, 'Woo-hoo! I don't have to worry about that new van we just bought,' " Bryson-Beane says. "And I thought, 'Maybe we'll be able to start saving for some college.' "

"I guess such a big savings justifies all the years that I'm treated as a single filer," Beane says.

The couple can now try to get tax refunds for as far back as 2008. That's when Washington state recognized community property ownership for registered domestic partners.

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