Same sex marriage is still a tempestuous topic in the United States and despite a growing acceptance and recognition of same sex relationships, there are still many concerns before marriage equality is truly reached. While marriage should be about love and companionship first and foremost, there are a lot of financial advantages that can coincide. Many married couples benefit from tax breaks or combined finances and assets, and a lot of these benefits were denied to same sex couples. Since the Defense on Marriage Act was ruled unconstitutional in 2013, same sex couples have been able to benefit from a number of federal laws regarding marriage. Here are a few different ways that same sex marriage can help the financial situation in a same sex household:
Income Tax
Most married people file their annual taxes jointly and for a long time, same sex couples had to file separately. Being officially recognized by the federal or state government allows them to file jointly and can save them a significant amount of money. Of course, filing jointly won’t be beneficial to everyone depending how much each person earns and what income bracket they fall into, but the ability to file taxes together is a big financial benefit.
Refiling Taxes
The 2013 ruling that struck down DOMA meant that many already married same sex couples had the opportunity to redo their previous three years worth of federal income taxes. Since many people benefit more from filing jointly with their spouse over filing individually, being able to redo three years worth of taxes can be a significant advantage to a same sex household’s finances.
Gift Tax
Under DOMA, same sex couples were subjected to a gift tax when transferring assets of more than $14,000 to each other. This tax never applied to heterosexual couples and tended to cost same sex couples a great deal of money. However, federal and state recognition of same sex marriage or civil partnerships means that this tax can be reduced or eliminated.
Health Insurance
Same sex marriage or domestic partnerships can also help decrease the amount spent on health insurance. Being able to be covered by your spouse or partner’s health insurance will mean having to pay less on health benefits out of pocket. Additionally, the insurance covering someone’s spouse would be tax free as companies would no longer be allowed to consider the coverage of a same sex spouse as additional income.
Heath Benefits
In addition to providing a wealth of financial benefits concerning taxes on health insurance, same sex couples can get reimbursed for medical costs from health flexible spending accounts.
Social Security Benefits
Same sex couples can now get a significant financial boost from social security benefits that have always been available for traditional married couples. For instance, receiving the one-time lump sum death benefit to help pay for funeral arrangements, spousal retirement benefits, and spousal survivor benefits are all options. This is a huge advantage for same sex couples who were previously denied access to their partner’s social security benefits.
Estate Tax
Same sex marriages also mean that same sex couples are exempt from paying estate taxes on any property under a certain monetary limit that one person leaves to their spouse in the event of their death. Married couples can also combine their personal estate tax exemptions.
Retirement Benefits
Same sex marriage can also benefit couples when it comes to retirement plans. Many same sex couples are denied access to each other’s retirement plan benefits, which can put a huge strain on their finances. By recognizing same sex marriage on a federal and state level, same sex couples would have access to their partner’s plans. Most married couples have access to their spouse’s retirement plan and benefits after their die and the money the surviving spouse receives often makes up a large percentage of their monthly income during retirement. Granting this benefit to same sex couples would alleviate a lot of financial stress during retirement.
Financial Aid
In December 2013, the U.S. Department of Education stated that it would recognize same sex couples and marriages when considering financial aid for students. Previously, someone in a same sex relationship had to designate themselves as single when applying for aid, but the new measure allows for recognition of same sex relationships. While this may not have an impact on the amount of aid someone received due to other economic or financial considerations, this can also significantly help students who are eligible for financial aid from the federal government.
Better Financial Security
Overall, same sex marriage can help same sex couples save more money and be more financially secure. Having to pay less money out of pocket on taxes and other expenditures means more money for other necessities. There are a lot of tax breaks that come into play and that will allow for better financial planning and better financial security.
(Photo courtesy of Steven Damron)
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