Before the year 2015, when the right to marry was extended to same-sex couples, they didn’t have the same financial concerns as married hetero couples. With marriage now a reality, many gay and lesbian couples need to consider financial decisions that weren’t previously on their radar. If you’re considering entering a same-sex marriage, you need to think about a few important financial issues.
Discuss your taxes
Getting married can have a direct effect on the taxes you pay. You can end up paying more or less. If one partner brings in all or most of the money in the marriage, it could result in a lower tax bill overall. When both spouses are high earners, however, fewer deductions are available, and you can end up paying thousands more to the IRS. It’s essential to make an appointment with an accountant to discuss how your taxes will be affected once you marry.
Talk about your government benefits
People in same-sex marriages are eligible to receive Social Security benefits based on what their spouses make. These benefits can be incredibly advantageous for couples whose partners don’t make as much as the other.
On the other hand, if one spouse only makes a small income, marrying could raise your social security taxes as a couple. Also, if one spouse is on disability or welfare, they could lose their benefits when marriage raises the household income level.
Think about your health insurance
Most health insurance plans that employers offer come with spousal coverage. If one spouse has generous health coverage at work, it would also extend to the other spouse. Marrying can mean significant health insurance savings.
Think about financial aid
If both partners are legal parents to a child, you need to report both incomes on the FAFSA application for financial aid for college, even if you’re not married. If you’re not married, and only one partner is a legal parent to the child, you only need to report the legal parent’s income. Whether it’s you going to college or your child, financial aid becomes more challenging when you’re married.
Discuss gifts of money
When you are a married couple, there are no limits to the gifts and cash you can give each other. If you aren’t married, however, the IRS requires that you pay a gift tax on gifts over $14,000 a year. While it’s rare for people to get caught not paying gift taxes, it can be problematic if you are caught.
A domestic partnership may be an option
When you get legally married, more than 1,100 legal rights and responsibilities apply to you. If the ideas above show you that you would be financially worse off if you got married, you could choose a domestic partnership instead of marriage.
When you record your relationship with your employer as a domestic partnership, you usually receive your partner’s health insurance from work and gain the right to inherit their property or visit them in hospital. A domestic partnership must be legally dissolved if you wish to marry someone else.
It’s important to weigh the benefits of marrying against what you lose. Rather than rush into marriage, it may make sense, in individual cases, to wait for a while and marry only when the time is right.
