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It's a Good Year for Homos Paying Taxes and Moving to Washington

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REPRESENTATIVE JAMIE PEDERSEN Gayer than a Care Bear dipped in sprinkles.

Whether you're gay yourself or just love keeping tabs on gay triumphs and struggles, a few items of gay business demand your attention this month.

First, gay money! As you are aware, the Feds want to know how much money you owe them by April 15, tax day. Turns out, this is a great year to be gay and owe taxes—if you're in a domestic partnership registered in Washington State.

Take state representative Jamie Pedersen (D-Seattle), who is gayer than a Care Bear dipped in sprinkles, is in a registered domestic partnership, and saved a bunch of money this year because of a new IRS interpretation of complicated tax laws relating to community property.

"We are the classic example of where it makes the most difference," Pedersen says, speaking of himself and his partner, Eric Cochran Pedersen, a stay-at-home dad who has no job income. In the past, the IRS didn't allow same-sex domestic partners to treat each other's income as community property for tax purposes. But now it does. So instead of Pedersen getting taxed at a high rate for filing all of his professional income from his law practice and his work in the state legislature as his income alone, now Pedersen's income is taxed as community property in his relationship with his partner. Meaning, it's split evenly between the two of them for federal tax purposes, which considerably lowers their family's overall tax rate.

"It makes a huge difference," Pedersen says, though he points out that he doesn't see it as extra money. "It just shows how much of a penalty we have had because the federal government hasn't recognized our relationship." (Peter Renn, a staff attorney for gay rights advocacy organization Lambda Legal, adds that this isn't exactly a crumbling of federal discrimination against LGBT couples. "The federal government here isn't actually respecting the relationship, but rather respecting the primacy of state property rights laws," Renn says. "That's why the IRS development doesn't violate the federal so-called Defense of Marriage Act.")

But experts caution: Don't try to take advantage of this new tax rule alone! (Really, this shit gets complicated.) Use a professional tax planner.

Second, gay marriages from other states! Thanks to a law pushed through the state legislature this session by Representative Laurie Jinkins (D-Tacoma), couples who got gay married in some other state or country will now automatically have all the rights and responsibilities of domestic partners in this here Washington State. You know: hospital visitation and decision-making rights, use of sick leave to care for a partner, the ability to leave and collect inheritance, etc. "It was a problem for the many couples who were married in their home states and then eventually relocated to Washington," says Josh Friedes, spokesman for the gay advocacy group Equal Rights Washington. "They didn't realize that their marriage wouldn't be respected in Washington."

Also remarkable: Five Republican senators voted for this bill, including all of the new Republicans from the east side of Lake Washington and Senator Dan Swecker (R-Chehalis), who in the past had been a stalwart opponent of domestic partnership rights. recommended

 

Comments (11) RSS

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1
"...gayer than a Care Bear dipped in sprinkles"? Ugh.
Posted by IslandGuy on April 6, 2011 at 12:18 PM · Report this
MacCrocodile 2
@1 - Have you ever met the guy?
Posted by MacCrocodile http://maccrocodile.com/ on April 6, 2011 at 6:54 PM · Report this
Reverse Polarity 3
The new tax rules are only an advantage for some gay couples, with vastly different incomes. People like Jamie, and Dan Savage.

For my partner and I, we will actually end up paying slightly more in taxes. It's very complicated; not only are the incomes combined and split, but so are the deductions. This screwed up our deductions that had previously been made separately.
Posted by Reverse Polarity on April 7, 2011 at 8:51 AM · Report this
OutInBumF 4
Thanks for letting us know! I was unaware of this new tax rule and will investigate with my RDP.
Posted by OutInBumF on April 7, 2011 at 12:44 PM · Report this
this guy I know in Spokane 5
(A) Dammit! I already filed my taxes as "single" even though I am in the same situation as Mr. Sprinkles (domestic partnership, one income). Too late now.

(B) Oh well. I don't make enough money to afford a personal tax planner anyway. I hope TurboTax catches up on this next year.
Posted by this guy I know in Spokane on April 11, 2011 at 9:34 AM · Report this
6
It's a shame the Stranger didn't publish anything about this before April since the guidelines were published in December or January. And I agree--it's not an automatic win for all couples.
Posted by CleverScreenName on April 11, 2011 at 9:58 AM · Report this
7
@5 Can't you refile amended returns? Check out the rules for 1040-X

@3,6 I wonder what would happen if you filed as single? It would make a hell of an interesting, and maybe precedent-setting, case if the IRS came after you to force you to do otherwise.
Posted by Brooklyn Reader on April 11, 2011 at 10:16 AM · Report this
8
Not favorable for me and mine. Lost deductions and lost return $6k. That's messed up! If we were married we would have chosen to file separately. Now we're paying for our basic rights with heavier taxes.
Posted by Uts on April 11, 2011 at 10:50 AM · Report this
9
@7, the tax/legal advice I had was not to deliberately ignore the ruling. Of course, per my (educated) counsel it's not an actual RULE, more of a guideline, and it isn't binding (or maybe it is), and not all IRS agents will be aware of it and I may get audited because an agent can't figure out why my reported income is half what's on my W2 so I've a decent chance of getting audited if I follow it...

It's really confusing and yeah, more than a little annoying.
Posted by CleverScreenName on April 12, 2011 at 2:37 PM · Report this
10
First off: Tax Day is April 18th this year due to Emancipation Day in the other Washington.

Secondly: You still file single (DO NOT FILE MARRIED FILING JOINT) you just move money around. I am a CPA and have found it is very confusing. A lot of different items must be considered on what is Community Property and what is not. Be careful how you file your returns and realize - Income Splitting is Mandatory for RDP's here in WA, CA and NV.
Posted by Hope for the end of DOMA on April 12, 2011 at 3:06 PM · Report this
11
Turbo Tax experts are unable to answer questions regarding RDP tax laws. Anyone have names of CPA's with RDP experience in Tacoma area? It's hard information to find.
Posted by RDP help needed on February 23, 2012 at 5:39 PM · Report this

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