3244 Brookside Rd 
Suite 140 
Stockton, CA 95219

Tax Read Time: 3 min

Tax & Estate Strategies for Married LGBTQ+ Couples

The 2015 Obergefell v. Hodges Supreme Court decision streamlined tax and estate strategizing for married LGBTQ+ couples. If you are filing a joint tax return for this year or are considering updating your estate strategy, here are some important things to remember.

Keep in mind, this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your tax strategy.

You can file jointly if you were married at any time this year. Whether you married on January 1st, June 8th, or December 31st, you can still file jointly as a married couple. Under federal tax law, your marital status on the final day of a year determines your filing status. This rule also applies to divorcing couples. Now that marriage equality is nationally recognized, filing your state taxes is much easier as well.1

If you are newly married or have not considered filing jointly, remember that most married couples potentially benefit from filing jointly. For instance, if you have or want to have children, you will need to file jointly to qualify for the Child and Dependent Care Tax Credit. Filing jointly also makes you eligible for Lifetime Learning Credits and the American Opportunity Tax Credit.2

You can gift greater amounts to family and friends. Prior to the landmark 2015 Supreme Court ruling, LGBTQ+ spouses were stuck with the individual gift tax exclusion under federal estate tax law. As such, an LGBTQ+ couple could not pair their $15,000-per-person allowances to make a gift of up to $30,000 as a couple to another individual. But today, LGBTQ+ spouses can gift up to $30,000 to as many individuals as they wish per year.3

You can take advantage of portability. Your $11.7 million individual lifetime estate and gift tax exclusion may be adjusted upward for inflation in future years, but it will also be portable. Under the portability rules, when one spouse dies without fully using the lifetime estate and gift tax exclusion, the unused portion is conveyed to the surviving spouse’s estate. To illustrate, if a spouse dies after using only $2.1 million of the $11.7 million lifetime exclusion, the surviving spouse ends up with a $9.6 million lifetime exclusion.3

You have access to the unlimited marital deduction. The unlimited marital deduction is the basic deduction that allows one spouse to pass assets at death to a surviving spouse without incurring the federal estate tax.3

Marriage equality has made things so much simpler. The hassle and extra paperwork that some LGBTQ+ couples previously faced at tax time is now, happily, a thing of the past. Remember to check the tax laws in your state with the help of a tax or financial professional.

1. Internal Revenue Service, October 14, 2020
2. Internal Revenue Service, March 12, 2021
3. Internal Revenue Service, April 12, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Financial Fixes: The Hidden Costs of Home Ownership

Financial Fixes: The Hidden Costs of Home Ownership

Six out of 10 millennials regret buying a home because they weren’t prepared for the hidden costs.

Replacing Your Medicare Card

Replacing Your Medicare Card

Learn how to replace your lost, stolen, or damaged Medicare card in this helpful article.

Infographic: Women Are Financially Savvy

Infographic: Women Are Financially Savvy

Women Are Financially Savvy. Yet, there are still unique challenges working against women in retirement.

 

Have A Question About This Topic?







Thank you! Oops!

Be My Beneficiary

Financial planning for couples.

4 Ways Whole Life Insurance Can Help with Business Expenses

Owning a small business is a dream for millions of Americans. Starting a business is exciting. It is also a huge commitment that comes with a unique set of challenges....

Tax-Advantaged Retirement Strategies

Heading into retirement with confidence is easier if your strategy includes steps to help minimize taxes. Even though your income is likely to decline, you still could be subject to high taxes if you’re not careful.

View all articles

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

Impact of Taxes and Inflation

Estimate the potential impact taxes and inflation can have on the purchasing power of an investment.

What's My Potential Estate Tax?

This calculator helps estimate your federal estate tax liability.

View all calculators

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

View all presentations

Safeguard Your Digital Estate

If you died, what would happen to your email archives, social profiles and online accounts?

The Latte Lie and Other Myths

Check out this video to begin separating fact from fiction.

The Richest Man in Babylon

In good times and bad, consistently saving a percentage of your income is a sound financial practice.

View all videos