By Melissa Myers and Michael J. Tucker
Melissa Myers: This issue, we are going to kick off the season.
Michael J. Tucker: The season to be jolly? I thought we were done with that.
Myers: We are, and I hope it was jolly for all our readers. The season I’m talking about is tax season.
Tucker: Ah, yes. And we are fortunate to have a community income tax professional to help us bring on the good cheer, namely, enrolled agent Bob Lind of Camelwest Tax Services. Bob, what should LGBTQ taxpayers be thinking about as they get ready to prepare their tax returns for 2015?
Lind: Well, tax laws, IRS publications and instructions are not necessarily written with same-sex couples in mind, so it takes some extra effort to read between the lines and apply them to our situation(s).
Myers: Then it’s even more important for same-sex couples to seek out guidance from an experienced tax professional who works with a lot of other clients from within the LGBTQ community.
Lind: I agree. Married same-sex couples face the new reality of joint income tax returns. But, for unmarried couples, how to treat joint expenses requires that your tax advisor must be familiar with the applicable laws and be able to apply them accurately to your situation.
Tucker: Many “mainstream” tax preparers may be unfamiliar with these issues.
Lind: It might make a difference in situations where unmarried couples are trying to maximize the combined tax savings, as well as simple matters such as knowing which community organizations can accept tax-deductible donations. Advisors who deal with many openly LGBTQ clients will likely be familiar with issues that might affect us, such as tax implications of nontraditional parenting situations.
Myers: Bob, how can a taxpayer find out if a tax professional really has sufficient experience in planning for same-sex couples? What questions should they ask?
Lind: Ask how long they have been in practice and what percentage of their clients are identify as part of the LGBTQ community (for me, it averages at about 75 percent). Regardless of their sexual orientation, advisors who advertise regularly in LGBTQ publications are likely have a lot of same-sex clients, and are familiar with the issues at hand. You might also ask your friends which advisers they use and in whom they have confidence.
Tucker: And what about alphabet soup? What designations should be a minimum requirement for a qualified tax professional?
Lind: Anyone can call themselves a “tax preparer,” because no laws currently require licensing, minimum education or registration, although legislation has been introduced that may change that. However, an attorney or CPA (licensed by the state) or enrolled agent (licensed by the Treasury Department) has to meet specific education, ethical and continuing education requirements, which are strictly monitored by their licensing agencies.
Myers: Good to know. I’ve been impressed with the ability of LGBTQ-knowledgeable tax professionals to work with such unusual situations as one partner supporting the other while they go back to school or are unemployed, they both support one partner’s child who lives with them, dealing with health insurance benefits, situations where you may be able to pay (and deduct) your unmarried partner’s medical expenses or even unusual dependency issues.
Lind: Right. We make a practice of understanding these situations. In addition, we’ll be able to advise someone of the tax implications of their retirement planning and joint investment options. We may suggest consulting an attorney for estate planning and perhaps a prenuptial agreement or a “living together” agreement. In effect, we work with these professionals as a team to address your needs and protect your interests.
Tucker: The best work we do for clients is when all pistons are firing in sync – where the attorney, financial planner and tax-professional are all on the same page and familiar with the unique strategies for planning as an unmarried individual or couple.
Myers: Thanks, Bob, for helping our readers get in the spirit of the season – the tax season, that is.
Editor’s Note: This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax or legal professional regarding their individual situation. Neither Camelback nor Commonwealth offers tax or legal advice.