DOMA is Dead – To Wed or Not to Wed; that is the Question

With the fall of DOMA has come a rush of same-sex couples (SSCs) converting their partnerships into marriages. It is an emotional time, especially for those who have waited for over thirty years to make that change. I have been to three weddings since the fall of DOMA and have five more between now and the first week of September. Put simply, it is inspiring and I am proud of these couples. Despite the pride and emotion we are all feeling, though, I urge all couples to proceed with caution. The right to marry, and to be recognized as a spouse, comes with changes that are worth consideration.

The media has been quick to discuss a few of the enormous benefits of marriage, particularly in the context of health, retirement and Social Security benefits. There has even been the occasional reference to the presumed right to file as married filing jointly (MFJ) in 2013. However, there are still questions on how, and to whom, these changes will be applied.

Despite the IRS’ immediate promise to “move swiftly,” they have not yet issued any statements about how they will implement the Supreme Court decision. We can be confident that the IRS will allow SSCs to file jointly if they have a valid marriage license by the end of 2013. The question then is what will be considered a valid marriage license. The answer hinges on whether the IRS will use the state of domicile or the state of marriage in determining who has a valid marriage license. While we wait for the IRS to make an official statement, the more pressing question for many is whether or not to get married at all, and if so, when. Emotion and celebration aside, the tax implications of marrying in 2013 are significant.

The ability to file MFJ will not be beneficial across the board. Some couples will realize a benefit in their total income tax and others will not. Generally, if there is only one earner, MFJ status will be financially beneficial. Others will experience what is known as the “marriage penalty” and end up with a higher tax bill when filing MFJ. This usually occurs when each spouse is an earner and the combining of income pushes the couple into a higher tax bracket.

The combining of incomes may also push many couples to an adjusted gross income (AGI) level that excludes them from tax deductions and credits that they have been able to claim in the past. For example, in 2012, many single taxpayers were eligible for the Child Tax Credit as long as their AGI was below $75,000, the beginning phase-out amount for a single taxpayer. If in an RDP couple each partner had a child and each partner had an AGI of $60,000, it’s possible that they could each claim the credit. The 2012 AGI phase-out for married taxpayers began at $110,000. In this example, if the couple was married, their AGI would be $120,000 and they would only be eligible for a reduced credit or, in some cases, none at all. Eligibility for many deductions and credits are determined by AGI and, unfortunately, the MFJ phase-out amounts are not equal to double the single amounts.

It is important to remember, too, that some of the discriminatory tax laws actually benefit unmarried couples. Perhaps the most significant is the adoption credit. My earlier post, The Adoption Tax Credit – One Good Thing the Defense of Marriage Act did for Registered Domestic Partners, goes into the details of why registered domestic partners benefit from the adoption credit in a way that spouses do not. If you are planning on adopting a child, and are not yet married, you may want to consider completing the adoption in 2013. If the potential tax benefit of the adoption credit exceeds the combined benefit from other changes, it may behoove you to adopt in 2013 and marry in 2014.

No matter when you decide to tie the knot, it is important to be prepared. A quick review of your tax situation can give you the information you need to be ready for the changes to come. A small amount of planning can go a long way.

Thank you to our current and former team members and colleagues for helping us develop this content.

QuickBooks Online Basic Training (for Nonprofits) - Part 1

$ 100

This training is designed for the accidental operations manager, board treasurer, executive director, or anyone else who needs to understand how QuickBooks works so you can accurately and confidently record and track your organization's financial information. It covers the basics of bookkeeping, QuickBooks vocabulary, data entry for income and expenses, and basic troubleshooting. To help you understand the why behind it all, this course also includes and introduction to basic accounting concepts. Although this training assumes no prior QuickBooks knowledge, there's still plenty to learn for those who need a refresher, need nonprofit specific training, or who are coming to QuickBooks Online from Desktop.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

QuickBooks Online Basic Training (for Nonprofits) - Part 2

$ 100

Building on Part 1, this training will show you how to verify your data entry and create useful reports for both staff and board that will help you make decisions. This training covers QuickBooks' banking integration, reconciling accounts, generating and manipulating reports. You'll also learn how to handle non-cash activity and understand the difference between cash and accrual accounting.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

QuickBooks Online Intermediate Training (for Nonprofits) - Part 1

$ 100

So you feel comfortable with QuickBooks data entry, but you still have a feeling there's a lot QuickBooks can do that you're not taking advantage of? Our two-part series of intermediate trainings are for you. In Part 1 we cover ensuring your QuickBooks is set up in the best way to capture different kinds of information: functional expenses (program vs. admin and fundraising), grants, and multiple entities like fiscal sponsorships or related organizations. You'll learn why this tracking is necessary, how to gather the information you need to do it, and how the information is used. budgeting -- for your whole organization, specific programs, and even grants.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

QuickBooks Online Intermediate Training (for Nonprofits) - Part 2

$ 100

Building on Part 1, in this training we'll take your fully tricked out QuickBooks and put it through the paces, covering how to track grant expenditures or invoice against reimbursable grants, how to allocate expenses across multiple programs, and how to manage multiple entities such as related 501(c)(3)/(c)(4) orgs. This course also includes general background and training on fiscal sponsorships such as what to consider, how to set them up, and the differences between fiscal sponsorship models.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

How to Review a 990 for Staff & Board

$ 100

This training reveals the mystery contained in the many pages of Form 990 and its associated schedules. You will learn from the perspectives of both a CPA 990 preparer and experienced nonprofit director. Nonprofit staff will learn how to review a drafted 990 and work with the external tax preparer on any needed adjustments. Board members will learn how to review a finalized 990, and which parts of the form are of greatest concern. This training is also useful to anyone who wants to better understand some of the "why" behind many nonprofit accounting structures, practices, and terminology.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

1099-MISC & 1099-NEC Training

$ 75

Every January your organization is responsible for providing 1099 forms to certain independent contractors who you paid more than $600. In this training we'll go over the ins and outs of which contractors this applies to, and how to build your systems so that it's not a crunch to prepare.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

Coming this summer, check back often!!

We offer trainings as 1:1 sessions, customized private trainings for you and your team, or sponsored customized trainings for your community members. Contact us for more information.

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