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Everything You MUST Know About Taxes for LGBTQs, But Don’t Even Know (Or Want) to Ask

Everything You MUST Know About Taxes for LGBTQs, But Don’t Even Know (Or Want) to Ask. UPDATES 2011 Tax Season. UPDATES Tax Season 2011

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Everything You MUST Know About Taxes for LGBTQs, But Don’t Even Know (Or Want) to Ask

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  1. Everything You MUST Know About Taxes for LGBTQs, But Don’t Even Know (Or Want) to Ask UPDATES 2011 Tax Season

  2. UPDATES Tax Season 2011 • Gender reassignment surgery is a medical expense deduction (IRS agrees) Rhiannon O’Donnabhaindeducted these expenses in 2001. The IRS denied the deduction and she sued in Tax Court. The Tax Court ruled in her favor in 2010 and in late 2011 the IRS acquiesced in that decision.

  3. UPDATES Tax Season 2011 • Adoption Tax Credit (2010/2011 refundable; not for 2012 yet) • http://www.irs.gov/taxtopics/tc607.html • Up to $13,360 credit/plus $13,360 exclusion • Special needs child credit is irrespective of the expenses

  4. UPDATES Tax Season 2011 • United States Tax Court ruled on March 5, 2012 in Sophy v. Commissioner, 138 T.C. No. 8, that the statutory cap on home mortgage interest deductions applies in the same way to unmarried couples as it does to married couples. Max qualified home mortgage indebtedness is $1,100,000 per residence. Expect an appeal to the 9th Circuit.

  5. Social Security matters … • Receipt of Benefits – CP or SP? • Self-employment tax on Sole Proprietorship Income – Split or not? • Spousal Benefits/Survivor Benefits – Potentially Valuable Asset

  6. Traps for the Unwary --- • ** Qualifying as a dependent; gross income must be less than $3,700 (CP income counts) unless minor or certain full-time student child; all or nothing allocation of benefits (e.g., child tax credit, EITC, dependent care, head of household) • ** Head of Household filing status; must pay more than ½ of the cost of maintaining the household and the household must be the principle place of abode for a dependent for more than ½ of the tax year • ** Earned income (does not include allocated CP income for purposes of the Earned Income tax credit; refundable Child Tax Credit or the Dependent Care Credit) • ** But higher AGI does count potentially reducing these credits

  7. Tax Resources • IRS Publication 555 online at www.irs.gov • http://www.irs.gov/newsroom/article/0,,id=245869,00.html • CA: Franchise Tax Board Publications 737 (RDPs)/776 (ss married TPs) • https://www.ftb.ca.gov/individuals/same_sex_marriage/index.shtml • Same Sex Tax Blog: Professor Patricia Cain • (http://law.scu.edu/blog/samesextax/) • Leonard Link • http://newyorklawschool.typepad.com/leonardlink/

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