HRC is celebrating tax season with their “7 Days to a Better Financial You” campaign, and kicks it off with the video of two lesbian moms talking about the financial difficulties of raising children under the unfair burdens faced by same-sex couples. HRC hits the high points here, but doesn’t discuss the fact that it can be harder for a same-sex couple to have one partner stay at home to take care of their children.
When one partner leaves paid employment, the working partner must pay income tax on any medical benefits her employer provides to her partner, if she is even lucky enough to work for a company that offers such benefits. A few companies “gross up” salaries to compensate for the extra tax burden, but they are rare. This problem isn’t exclusive to parents, but has to factor in when a couple analyzes the impact of one parent staying home, especially if that person has had her own employer coverage.
The non-employed partner’s IRA can also no longer take in new contributions. A married couple filing jointly, however, can have the working spouse contribute as much as $4,000 to his/her own IRA, plus $4,000 to the non-working spouse’s IRA. (It’s a little more complicated than that, really; the IRS has details.) Same-sex couples need to consider this when evaluating the long-term impact of a non-employed partner on their financial plans.
Federal law rules both of the above, so even we same-sex couples lucky enough to be married in Massachusetts have the same problems.
Whether to have one parent leave paid employment is a decision couples must make for themselves. Those who feel that doing so is the best way to raise their children, however, should not be disadvantaged because both partners happen to be the same gender.
Here’s the HRC couple (whose IKEA Effektiv bookcase indicates they are money-conscious in other ways, too):
(Yes, we own the same bookcase. Three of them, in fact.)
Coincidentally, on the way in to work this morning, I was thinking that I need to stop my partner’s IRA contributions for the year. She had our second child at the end of last year and has worked very little at her SAHM job in 2008. The only way she is permitted to contribute to her Roth is if her income exceeds contributions (I believe).
It’s very financially hard to have a SAHM in a same-sex couple. My company does not provide domestic partner benefits so we pay for her insurance out of pocket and paid for her pregnancy and delivery out of pocket.
Fortunately, we’re complete aligned on the importance we place on her being a SAHM so that our children are raised by us and have this gift in their early development.
(from above)… Also, we have 2 of those bookcases.
What stinks the most is the social security- should there be any come that time. I am so fearful that my partner will be bankrupt without my social security if I die first- since I am the one working and she is the SAHM.
We are really planning for potential disaster in older age- since it seems almost likely the whole system will crash in, right when we need it. We are both Gen Xers, wedged between the biggest factions of voters and likely to get screwed both ways.
This is such a good point. This year was the first year I was allowed to claim my partner on my taxes in Oregon. I had to do as a dependent, though, based on the new domestic partnership clause. According to the Department of Revenue here, they consider a domestic partner anyone who is not allowed to marry, but would do so if they could (simplified). This is step, albeit small, but still doesn’t help with all the other issues that federally we are blocked out of.
We have one of the bookcases as well.