New financial, tax planning for LGBT couples, advisers

by March 20, 2014

The annual April 15 income tax filing deadline looms, and just as late January is a good time for those early bird filing season stories, the next few weeks are ripe for last-minute tax tips and explainers.

Taxes on CalendarThis year, one of the game-changers is the 2013 U.S. Supreme Court ruling striking down the federal Defense of Marriage Act, and subsequent announcement by the Internal Revenue Service that it would recognize gay marriage for federal income tax purposes.

The ability of same-sex couples to prepare their tax returns as married, filing jointly, presents both opportunities and hassles for filers.  And one story you might want to do as a spin-off from the usual personal finance pieces involves the growing specialty of tax, financial planning and legal advice for gay and lesbian marrieds.  As an entirely new market for professional advice, the growing body of legally-married same-sex couples has not escaped the notice of the industries that sell such advice: Investment News calls this a “New financial planning frontier,” and the Insured Retirement Institute — a financial services lobbying organization — last fall issued a press release noting the strong interest by gay couples in receiving retirement-planning assistance.   Credit Union Insight last year published an article Targeting gays and lesbians in the banking sector,” that stressed the importance of this “financially significant segment.”

So, as you seek tax tips and filing advice for same-sex couples — who still “face nightmares,” as CNN Money put it — , be on the look for niche businesses and specialty firms that not only can share their expertise but might make for interesting profiles or discussions of demographic-based marketing.  Marcum LLP, a large accounting firm, for example, has its “LGBT and Non-traditional Family Practice Group,” as does another large company, EisnerAmper.

Two women at the marriage alter

The IRS ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. Photo: New Zealand Herald

Before the DOMA ruling, some financial consultants obtained the Accredited Domestic Partnership Advisor designation, because before being able to legally marry, same-sex couples had to plan for one another’s security using diffrent tools, like life insurance, where payouts weren’t dependent on marraige the way Social Security and some pension plans are/were.  If you’re pairing an overall financial-planning piece with a tax-time article aimed at same-sex couples, be sure to ask advisers how couples’ strategies might change now.

Back to taxes:  Check out this new IRS YouTube video explaining key tax tips for same-sex couples.  A couple of key areas to stress in your last-minute articles:

> Some married couples will pay more, but it’s complicated.  As this New York Times piece explains, the choice to file singly or jointly depends on where couples were married and where they live now, though generally those in legal marriages must now file jointly.  When couples have similar income levels, they can be caught in the “marriage penalty” of paying more in federal taxes than they would if filing apart; couples in which one earns significantly more than the other tend to benefit from a “marriage bonus.”  Get a local enrolled agent (a specialized tax preparer) to outline a couple of hypothetical scenarios you can illustrate for readers.

>Married couples can go back and file amended returns for three years, if doing so will net them a refund.

> State tax filing is going to vary widely by jurisdiction; be sure to include a separate info-box or sidebar on what the prevailing rules are in your state.