Now that the Supreme Court has legalized marriage for same-sex couples nationwide, there’s nothing special LGBTQ people need to know about taxes, right? Wrong. Very wrong. The secret is that a big piece of the tax code was built to help you. To help all of us, including LGBTQ taxpayers — really! The tax code is where many of the financial pieces of our social support network live. But most of us don’t know how to access them.
For about a decade, I worked at a small income tax office in Holyoke, Mass. Every year, when tax time rolled around, my desk became a haven for countless LGBTQ people. Most of the time, the questions my clients asked had nothing to do with marriage.
“Between you and me, what do they mean by gender? Are they asking what’s on my license, what’s on my birth certificate, or something else?”
“My partner and I finally adopted a baby! But we’re not married. Is there a rule around who can claim our daughter on their return?”
“You know I finally had top surgery this year. It totally wrecked my bank account. Is there anything I can do with my taxes to help?”*
When I was preparing taxes, it quickly became clear to me that our community doesn’t have the information it needs to navigate the tax filing process. My clients were often desperately in need of the credits and deductions that are hidden in the complexity of the tax code to make ends meet. Here’s why:
While 82 percent of same-sex couples are part of the labor force, only 29 percent of LGBTQ adults are thriving financially. In fact, one in five LGBTQ people who are living alone make less than $12,000 per year. Those numbers are even starker for people with compounding oppressions: one-third of black transgender and gender-nonconforming people report incomes of less than $10,000 per year. Keep in mind that these numbers are effectively snapshots. Many of us will spend short periods of time living at or below the poverty line when we experience significant life events, like the loss of a job or the death of a family member. In fact, about half of people who experience poverty because of an event like this get out of poverty within a year.
There are many provisions in the tax code that are meant to help us do just that. Credits like the Earned Income Tax Credit provide a much needed boost to income — up to $6,242 in 2015 — that can give people the resources they need, such to as pay bills or buy a car to get to a better job. Deductions like the one for medical and dental expenses can help defray out-of-pocket costs for transition-related, HIV-related, mental health, or reproductive health care (including abortion). These credits and deductions mean real change for the members of our community. In 2013 medical expenses left 10.6 million people in the U.S. in poverty. That same year the Earned Income Tax Credit and Child Tax Credit lifted 9.4 million people out of poverty and made 22 million other people less poor.
Many LGBTQ people could take advantage of these tax benefits if they knew the right questions to ask about their financial situation. That’s why we’ve created the Queer Our Taxes Taxpayer Guide. The guide will answer some of your questions and help you understand what to ask when you’re sitting in front of the person (or computer program!) that’s preparing your return.
Having this information is just a first step. Many credits and deductions remain out of reach for LGBTQ people and families because discriminatory laws make forming legal relationships with our children more difficult and because our families and financial lives aren’t always reflected by the tax code. As we work to queer the tax code, we hope the information in this guide helps you find the resources that are available to you.
*Short answers: IRS matches gender to your Social Security records. There are rules about claiming dependents, and there’s also an adoption credit that can help some people defray the costs of adoption. Transition-related care, including surgery, is deductible on your return. Find out more in our new report: QueerOurTaxes.org.