Monday, August 23, 2010
Gay couples are taking one step forward, one step back when it comes to their tax rights. Not to mention sideways.
The shifting landscape of new rules and initiatives makes it a big challenge to provide same-sex partners with good tax advice.
In Massachusetts, a successful challenge to a federal law denying gays tax breaks that heterosexual couples get could mean progress, but only if it stands up to an expected government appeal.
In California, a tentative change in the way community property is taxed has advisers scrambling to figure out how their gay clients can benefit. Advisers there are trying to file amended returns for refunds, and the task is a study in the complexity of gay tax issues, said Patricia A. Cain, a law professor at Santa Clara School of Law.
Cain is among a small community, including some accountants and tax attorneys, that has studied the tax issues of gay couples for some time. Advisers overall, though, have little history in dealing with same-sex couples, according to Don Weigandt, a wealth adviser in the Los Angeles office of J.P. Morgan Private Bank. The gay community "is not being served as well as it should," he said. ...
Last week, California state lawmakers approved a resolution urging the U.S. Internal Revenue Service to change a community-property policy that requires many same-sex couples to pay more tax. They want the agency to formalize an opinion earlier this year that would help gay couples with this. Advisers in California, Nevada and Washington aren't waiting, and are already are working on amended returns based on the opinion.