Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Sunday, June 8, 2014

Avoiding the Marriage Tax Penalty Via Domestic Partnerships

Gay marriage 2

Some states have created a new tax shelter for heterosexual couples in an effort to provide a legal alternative to banned marriage for same-sex couples.  By choosing domestic partnership or civil union over marriage, opposite-sex couples can avoid paying the federal income tax marriage penalty just like same-sex couples. 

States such as California require domestic partners to file jointly for state tax purposes even if they file separately on their federal 1040s. 

Since the Supreme Court opened the door to legalizing gay marriage in the DOMA decision, the tax consequences for same sex couples has become more readily apparent.  Generally, married couples pay a marriage penalty if spouses make similar incomes.  If one spouse earns more than the other, the couple may enjoy a bonus.  On the other hand, civil unions and domestic partnerships make it possible for same-sex couples to enjoy state-level legal benefits of marriage without suffering the federal marriage tax penalty. 

While it may seem domestic partnerships reap all the benefits, there is a flip side.  Couples choosing domestic partnership or civil union are barred from filing jointly on their federal tax return, and are unable to benefit from the marriage bonus. 

See Howard Gleckman, Are Domestic Partnerships A Way For Heterosexual Couples To Avoid The Marriage Tax Penalty?, Forbes, June 5, 2014. 


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