[caption id="attachment_368" align="alignleft" width="112"] Boyce Hinman[/caption] Authored by Boyce Hinman, founder and director of the California Communities United Institute, and member of Marriage Equality USA. Hinman has been writing and posting a series, "Monday Morning Marriage Memo," as part of his  Anatomy for Justice blog. This article was first published there, and is republished here with the author’s permission. Hinman resides in and serves California, therefore the posts sometimes have a California slant. NOTE: Marriage Equality USA is not a legal firm or a tax/accounting firm. No action should be taken based solely on the content of our news blog or website. If you are part of a same sex couple who married in California during the summer of 2008 you might qualify for a refund of part of the FICA taxes that you paid for tax years 2010, 2011 and 2012. Your employer may also qualify for partial refunds of FICA taxes it paid during those same tax years. To qualify for those refunds you would have to have been working for wages during those years. The same is true of same sex couples who married legally in other states or other nations where such marriages are legal, such as Canada. And it would still be true for same sex couples who married in states or nations which allow such marriages but who now live in states which do not allow same sex marriages. Note: I am not an attorney or a qualified tax expert. No action should be taken based solely on the content of these memos. However, I hope the memos will help you ask the right questions of people who are qualified in these issues. First let me explain what FICA taxes are. FICA taxes are taxes that employees pay into the Social Security fund and the Medicare fund. The taxes in those fund accounts are used to provide you with Social Security and Medicare in your senior years. Employers also pay taxes into these funds. In 2013, workers are paying Social Security Taxes equal to 6.2% of their total earnings. Each month that amount is withheld from the worker’s check and sent to the Social Security fund. The worker’s employer pays the same amount into that fund. With regard to Social Security that 6.2% applies only to the first $113,700 in annual income. Any income over that amount is not taxed. Also, in 2013, workers are paying Medicare taxes equal to 1.45% of their wages. Employers pay the same amount of Medicare taxes for each employee. This tax is charged against the total wages of each employee. There is no upper limit on the wages taxed for Medicare. So, why might refunds be due? Before DOMA was overturned, if an employer offered health insurance to the same sex spouse of an employee, the IRS considered the value of that insurance to be taxable income paid to the employee. So, when computing the FICA taxes owed, the IRS said, for same sex married couples, the FICA taxes owed were a percentage of the wages paid plus the value of the insurance provided to the same sex spouse of the employee. By contrast the IRS did not charge FICA taxes against the value of health insurance provided to the opposite sex spouses of employees. Now that DOMA has been overturned FICA taxes are not charged against the value of health insurance provided to the same sex spouses of employees where the couple married in a state or nation that allows such marriages. In addition, both employers and employees may seek refunds of that part of the FICA taxes that were charged against the value of the same sex spouse’s health insurance in the years 2010, 2011 and 2012.

[caption id="attachment_368" align="alignleft" width="112"] Boyce Hinman[/caption] Authored by Boyce Hinman, founder and director of the California Communities United Institute, and member of Marriage Equality USA. Hinman has been writing and posting a series, "Monday Morning Marriage Memo," as part of his  Anatomy for Justice blog. This article was first published there, and is republished here with the author’s permission. Hinman resides in and serves California, therefore the posts sometimes have a California slant. NOTE: Marriage Equality USA is not a legal firm or a tax/accounting firm. No action should be taken based solely on the content of our news blog or website. According to LexisNexis, approximately 55 percent of American adults do not have a will or other estate plan (such as a trust) in place. Among minorities, the numbers are higher: 68 percent of Black adults and 74 percent of Hispanic adults do not have one. For same sex couples who are not married, or in registered domestic partnerships, this can be very dangerous. Note: I am not an attorney or a qualified tax expert. No action should be taken based solely on the content of this memo. However, I hope this memo will help you ask the right questions of people who are qualified in these issues. If someone in California dies without a will or a trust, his or estate is distributed according to California’s Law of Intestate Succession, as found in Sections 6400-6414 of the California Probate Code. A lesbian or gay couple could have been living together for decades, but, if one of them dies and has left no will or other estate plan, and if they were not married or registered domestic partners, then the law considers them legal strangers. The survivor has no right to inherit any part of the deceased’s estate. If the deceased had owned their home the survivor wouldn’t even have a place to live. Even if they were married or registered domestic partners, without a will or trust, the survivor might have to share the estate with other family members of the deceased. It would not matter that the couple may have agreed that each of them wanted their soul mate to have everything when one of them died. Here are the details. First we need to understand some concepts. These are the concepts of “community property, ” “quasi-community property” and separate property. Under California law all earnings of married couples, during their marriage, are community property. They each own all of it. The same is true of registered domestic partners. Any property bought with those earnings is also community property. Earnings that were earned prior to their marriage are separate property. For example, suppose John retired before they married and he is getting a pension from his former employer. His monthly retirement check is his separate property. He earned that pension prior to their marriage, Property bought by one of them, prior to their marriage is separate property, and remains so during their marriage. If John kept his pension money separate (say in a separate bank account for himself) property bought with that money would be his separate property. Otherwise, property bought during their marriage, with community property earnings is also community property. Quasi-Community Property is property acquired by a married person or couple in a non-community property state that would have been community property if it had been acquired in a community property state. California is a community property state. So, if a couple here bought a vacation home in Oregon, it would be considered quasi-community property in California. Under California’s law of intestate succession, if a lesbian or gay couple never married or registered as domestic partners, and one of them dies without a will or other estate planning tool (such as a trust), the survivor gets none of the deceased person’s estate. Even if they were married, but one died without a will, California law treats the three types of property in different ways. The surviving spouse gets the half of the deceased’s part of their community property. Again, with quasi-community property, the survivor gets the half of the decedent’s share of their quasi-community property. But with separate property of the deceased, the surviving spouse or registered domestic partner gets all of it only if the deceased left no children, parents, brothers, sisters or children of those brothers and sisters. Depending on which of those relatives survives the deceased spouse, the surviving spouse could inherit as little as one third of the separate property of the deceased. So it is very important for even married couples, or registered domestic partners, to have either a will or some other estate planning tool so that there estate will go where they want it to go. One final point. Property that is passed to survivors through a will must go through probate court. That court process can take a long time and it can be expensive. Property passed through a trust does not go through probate. So, depending on the size of the estate, it might be preferable to use a trust rather than a will. Setting up trusts can be expensive too. So some say using this estate planning tool is only advisable if the estate is worth $100,000 or more.

[caption id="attachment_368" align="alignleft" width="112"] Boyce Hinman[/caption] Authored by Boyce Hinman, founder and director of the California Communities United Institute, and member of Marriage Equality USA. Hinman has been writing and posting a series, "Monday Morning Marriage Memo," as part of his  Anatomy for Justice blog. This article was first published there, and is republished here with the author’s permission. Hinman resides in and serves California, therefore the posts sometimes have a California slant. NOTE: Marriage Equality USA is not a legal firm or a tax/accounting firm. No action should be taken based solely on the content of our news blog or website. The federal government requires that all same sex married couples either file joint federal income tax returns or file as married filing separately. This includes same-sex married couples. However, in 2010, the Internal Revenue Service (IRS) issued a ruling that affects the filing of federal income tax returns by registered domestic partners, as well. The key wording in that ruling is as follows: “For tax years beginning after December 31, 2006, A California registered domestic partner must report one-half of the community income, whether received in the form of compensation from personal services or income from property, on his or her federal income tax returns.” Note: I am not an attorney or a qualified tax expert. No action should be taken based solely on the content of these memos. However, I hope the memos will help you ask the right questions of people who are qualified in these issues. The ruling says the income of California domestic partners must be split evenly because California is a so called “Community Property” state. Under California law income earned while a couple is in a registered domestic partnership is community property. All that income is owned by both of them regardless of who earned it. There is at least one exception to the requirement of splitting the household income on the federal tax return. That exception has to do with when the income was earned, or when the property was purchased. If, for example, one of the partners retired before entering the partnership, and that person is receiving a pension, then that pension income is separate property and does not need to be divided and half shown on each federal tax returns. Similarly, if one of the partners bought a rental property, prior to entering the domestic partnership, the rental income from that property is not community property. The income from that property should be reported only on the federal income tax return of the person who bought it prior to the domestic partnership. Sadly, the IRS staff does not seem to be informed of the ruling. Once we heard of the ruling Larry and I started dividing our community income in half and each reported half of it on our federal returns. Each year the IRS responded with a letter saying I had under reported my bank account interest income and so I owed more taxes than I had paid. However, the issue was that our joint savings accounts had only my Social Security number attached to them. Each year I cleared up the problem by sending them a copy of the IRS ruling, plus a copy of our registration as domestic partners. You can see, and download, a copy of the IRS ruling by clicking on the following link and then scrolling down to and clicking n the link at the bottom of the web based copy of this article.  Here is the link to get you started. IRS Ruling These are complicated matters. Anyone wanting to act on this information should definitely consult an expert on income taxes before taking that action.