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Ask Team Practical: The Tax Man Cometh

Marriage, domestic partnerships, and taxes

Q: My fiancé and I are a straight couple who will be getting a registered domestic partnership this summer. The reason we’ve opted for the partnership, instead of a federally recognized marriage, is financial: the tax system is structured in a way to provide a marriage benefit, but only if one person makes a lot less than the other.

When I ran the numbers I realized that we would be paying thousands of dollars more (like, more than five) in taxes if we were married. PER YEAR. While there are certainly tons of financial benefits for marriage, none of them would actually benefit us in our current situation. So we decided that we would get a domestic partnership instead—where we live, these are available to couples regardless of sexual orientation. Great, right? Domestic partners enjoy the same rights locally, just not federally, as married partners, so we can commit ourselves legally to one another without getting the federal government involved at all. We may choose to get federally married down the line, but that’s about as significant to our relationship as choosing to itemize or take the standard deduction. It matters because of money, but it doesn’t affect our commitment, emotions, or day-to-day lives. So, a wedding ceremony plus domestic partnership (plus lots of other contracts, trusts, and living wills that are necessary to fully integrate our finances and legal stuff) is scheduled for this summer.

My fiancé and I are both quite pleased with ourselves for working this out, but I’ve been less pleased at people’s reactions. I was fully prepared for acquaintances or certain conservative relatives to be rude about it. But when good friends make offhand comments like, “You’re not really getting married,” it hurts my feelings. A lot. And I’m also tired of it. I just want to be excited for my wedding without dealing with explaining the tax code every goddamn time. This isn’t something I’m looking to upgrade. This isn’t a not-really-wedding. What if, instead of paying multiple thousands of dollars to the federal government every year, I just set a thousand dollars on fire as part of the ceremony? Would that be commitment enough for people? Of course the legal status of relationships is important, but I’m not inviting people to my wedding for legal reasons.

I know my wedding will be real. In fact, I would argue that it will be more real than many unions that have received the federal government stamp of approval. But the whole point of having a ceremony (for me anyway) is to have the important people in my life acknowledge and witness that commitment. Hearing “It’s not a real marriage” makes me realize (and wonder who else feels the same but hasn’t said) that some of the people who’ve been invited aren’t really witnesses to that at all.

My actual question is twofold: One: What do you say to someone you’re close to who says that your marriage isn’t real? If people already know the full story, I don’t know how else to convey to them that this is as real as it’s gonna get. Two: One of the privileges I have as a straight person is to just not say anything and “pass”—i.e., stop telling people we’ve invited that we’re getting a domestic partnership and let them assume we’re getting a federal marriage. This also doesn’t feel great, because it feels like we’re keeping it a secret, but I’m not ashamed of this at all! So do I tell, or not?

What do you think?

Sincerely,
Economic Rationality is Less Popular than I Thought

A:

Dear ERiLPtIT,

THE SHORT ANSWER IS…

No one but the two of you get to decide how real your marriage is. No one. You decide how your marriage is ratified, and who gets a vote in that. What a great freedom the two of you will have, to decide what your marriage means, and what it will look like throughout your lifetime. And yes, that great freedom comes with the knowledge that you will have to explain for the rest of your lives that just because it doesn’t look traditional doesn’t mean it’s not real. But it doesn’t matter what they think. It matters what you think.

If you don’t tell, if you don’t sing it from the rooftops, if you coast behind straight privilege because it’s easier and because you’re tired (which is fair!), then I wonder if you run the risk of thinking your commitment is something not worth sharing with the world and is something to be hidden and something shameful. So tell, and often.

But your email got me thinking, and you know I can’t leave it there, so settle in.

WE SHOULD ALL BE CELEBRATING ALTERNATIVE PARTNERSHIPS

From this vantage point, as a queer woman married to another woman, I deeply empathize with how badly it stings that your people aren’t recognizing the commitment you’re making to your person. Last week a well-meaning person asked me if my wedding had been traditional, “Like a regular one.” You and I both know that she didn’t mean to toss that micro-aggression at me, that she didn’t mean to remind me that I still stand on the outside. We both know the question came from a place of genuine interest, and hopefully a place of educating herself. And still, how it smarted to be Other, to be a curiosity.

A friend of mine has a postcard wedged on her fridge: “Congrats, you’re getting married! That’s like telling the cops you’re in love.” It does seem a bit ludicrous that many queer people prioritize marriage equality above all else. Why aren’t we all fighting for the recognition of alternative solemnizations of partnerships? As you’ve proved with your question, we already know they’re happening all over. We don’t know to what extent couples are filing paperwork, and it’s also none of our business, really. If you say you’re married, then that’s good enough for me. It only matters that it means something to the two of you, and your great work and joy is figuring out what, precisely.

ON THE OTHER HAND….

I keep wondering about how you’ve decided not to get federally married due to a single tax issue, the marriage penalty. I am dead sure you will create an authentic, meaningful, permanent union. I think of my friends in Mississippi and Missouri and North Dakota who have done just that in the face of their states prohibiting their marriages, and there’s no doubt that they are as emotionally wedded as I am, and you will be too. I’m just not sure a domestic partnership can replicate the emotional, legal, financial, and permanent benefits of federal marriage. I mean, that’s why my friends in Mississippi and Missouri and North Dakota would really like access to full legal marriage, no matter what it does to their taxes. So to answer the question more thoroughly, I went to the experts.

WHAT THE HECK IS THE MARRIAGE PENALTY, ANYWAY?

I asked Rus Garofalo of Brass Taxes what, precisely, the marriage penalty is, and he explained thus:

“The basic premise behind US tax code is that if you’re making a lot of money, you should pay more taxes than those who earn lower salaries. The marriage penalty isn’t a fixed concept, but depends on what the current income brackets are, and those can vary with the political tides. If you and your spouse earn over a certain amount of money, then a portion of your joint income will fall into a certain income tax bracket. That portion of your income will be taxed at a higher rate than it would if you were single. Depending on the year, that rate might increase or decrease. But that doesn’t mean that all your money jumps into a higher tax bracket, just that portion.” (Editor’s note: more detailed information here.)

Conversely, the marriage penalty becomes a marriage bonus for a couple where one spouse is making less than the other—meaning that the stay-at-home parents, part-timers, or those supporting their spouses in other non-financial ways pay less tax when the couple files jointly. As Rus pointed out, income tax brackets shift from year to year, so keep in mind that you might not always be in the boat you’re in now. What if one of you loses your job, or stays home for a while to raise a kid? Wouldn’t you want the marriage bonus? You can’t, after all, just divorce and re-marry whenever it suits your taxes. (Nor are the financial realities and laws of marriage just about taxes, but we’ll get to that.)

NATIONAL PARKS, SCHOOLS, AND DRONES

My partner K and I are in the same boat as you. Now that we’re married, we got less back from our taxes last year than we would have if we filed as unmarried people. Essentially, we made more money from the system, and paid more into the system, than we would have if we were making less. (And someday, when I wear K down enough, we will make less and will benefit from the marriage bonus, because I will convince her that I should quit my day job to write the Great American Blog Novel.)

This all actually seems pretty fair to me, as I come from the public health perspective, where we who are healthy should pitch in to shore up our sick and aged, since we will eventually be those sick and aged. Ideally, those making a higher income pitch in more than those who don’t for the resources we all use. Paying taxes isn’t all bad: you’re supporting veterans’ care, paved roads, national parks, schools, and libraries, to name a few. And yes, drones, which I’m not so thrilled about, and that’s why we need to actively participate to change those systems—rather than opt-out.

“Paying taxes is when you put your money where your mouth is,” said Rus. “The sum I sometimes tell people they owe triggers a flight or fight reaction. But that’s when you pay for the things you say you agree with theoretically.” (Like, say, public schools. Or roads.)

PAPERWORK AND PROTECTION: HOW CLOSE CAN YOU GET?

Can you actually replicate the myriad legal protections of marriage by substituting a domestic partnership? Can you really contract out the thousands of status points afforded by marriage? Theoretically, I suppose you can come pretty close (as long as neither of you die), and this is where your straight privilege might come into play.

Should you have children, most people will presume your male partner is the father. If your kid breaks her arm on the playground and your partner goes to pick her up, theoretically no one is going to prevent him from taking that kid to the ER even though his custody rights aren’t automatic, the way they’d be if you were federally married. If you are in the hospital, and your partner wants to stay past general visitation hours, most people will probably assume he’s your husband and let it go. You guys probably won’t face the same reflexive “no” that queer couples might.

But all it takes is one person, one grouchy night nurse, to push this issue. And that’s what tipped my scales in favor of getting federally married. I feel a hell of a lot better knowing that we have a bevy of protections (flimsy though they might still be) from our federally recognized marriage, not to mention that K will also inherit my social security benefits, should the system stick around that long, and retirement or 401(k) accounts without tax consequences. Or! She’ll inherit that fabulous rambling home in Maine that we’re going to buy for me to write my novel in. (Remember Edie Windsor, and her $363,053 tax bill on the apartment they’d lived in for decades?) You can hire a fleet of expensive lawyers to monitor everything you do, and set up elaborate systems to deal with those hypothetical situations, but it will cost you time and money (and if it were me, emotional stress) to try to replicate the benefits of marriage through another hugely detailed legal contract. Ultimately, I wonder if the money you’re saving by avoiding the marriage penalty might be lost in all you’ll need to do in order to constantly monitor the loose ends. Plus, there are some loose ends you’re just never going to be able to tie up. Like those social security benefits, or inheritance tax.

And What If…? (Life Is Long)

Speaking of ends, what happens if things don’t go the way you’ve planned? “Getting a divorce is way more expensive than dissolving a Domestic Partnership, depending on where you get the DP. Sometimes dissolving a DP is as easy as going to the county office where you registered, and filling out a form,” says Bevin Bermingham, Esq., a local Brooklyn attorney. “Divorce often involves waiting periods and expensive filing fees, often more than what it costs to get married, and can be difficult to do on your own without an attorney. But the whole reason divorce is expensive and difficult is to protect people from getting screwed over by their spouses. Divorce laws protect the vulnerable spouse.” One day you could be that more vulnerable partner, and in a domestic partnership, your protections are pretty much nil.

Ultimately, yes, you will be shelling out more taxes if you are part of a dual high-earning couple. But there are also huge benefits and peace of mind that come from being inside this system. Yes, I think it’s problematic that this is the relationship model that’s privileged and put forth as the best and only in our system, and boy did I go on about it last year. But at the end of it all, I sleep easier at night knowing that if I unexpectedly die, K would automatically receive my life insurance without a huge fight (and another tax hit, thank you again Edie Windsor), and that in our home state, at least, no one is going to question her full custody of our children. That’s worth it for me.

Team Practical, have at it. If you’re in a domestic partnership, why did you choose to go that route, and how have you attempted to replicate the benefits and protection of marriage? If you’re married, divorced or widowed, would you have done it differently?

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