Same-sex Mar­riage is Le­gal in D.C., but for Gay Cou­ples and Em­ploy­ers, Tax Dif­fer­ences Re­main

The Washington Post Sunday - - JOBS -

Last March, the city wit­nessed the first same-sex cou­ples reg­is­ter to marry in the nation’s cap­i­tal. Fed­er­ally rec­og­nized same-sex mar­riage re­mains elu­sive, how­ever, and area em­ploy­ers and same-sex cou­ples alike must nav­i­gate the dif­fer­ing tax im­pli­ca­tions of be­ing mar­ried as a same-sex ver­sus op­po­site-sex cou­ple.

For em­ploy­ees who en­roll a same-sex spouse or part­ner in their health­care plans, the fair mar­ket value of the cov­er­age is added to their W-2 forms at the end of the year as im­puted in­come for fed­eral tax fil­ings. Health­care cov­er­age for het­ero­sex­ual spouses is not sub­ject to such tax­a­tion. And the dif­fer­ence can drain the bank ac­counts of same-sex cou­ples: On av­er­age, em­ploy­ees with part­ner ben­e­fits pay $1,069 more per year in taxes than would an em­ployee with the same cov­er­age for an op­po­site-sex spouse, ac­cord­ing to a re­cent re­port by the Wil­liams In­sti­tute and Cen­ter for Amer­i­can Progress.

Now, a new trend seems to be emerg­ing in cor­po­rate ben­e­fits de­part­ments to mit­i­gate this un­equal tax bur­den on em­ploy­ees in same-sex re­la­tion­ships. Some ma­jor busi­nesses are com­pen­sat­ing em­ploy­ees with same-sex part­ners on their health in­surance for the ad­di­tional tax li­a­bil­ity. This prac­tice, known as “gross­ing up” wages has caught on as part of the next gen­er­a­tion of gay-friendly work­place stan­dards. Last year, trend­set­ting In­ter­net giants Google and Face­book an­nounced that they would pay out the tax dif­fer­ence on part­ner ben­e­fits to those em­ploy­ees af­fected by the law. Fi­nan­cial firms such as Bar­clays and Credit Suisse have also an­nounced that they will gross up wages for em­ploy­ees. Other em­ploy­ers with D.C.-area work sites are do­ing the same, in­clud­ing Sil­ver Spring-based Dis­cov­ery Com­mu­ni­ca­tions, Kimp­ton Ho­tels, Fen­wick & West LLP, Mor­ri­son & Fo­er­ster LLP and Cisco Sys­tems.

Seventy–two ma­jor busi­nesses and trade as­so­ci­a­tions, in­clud­ing Bethesda-based Mar­riot In­ter­na­tional and the So­ci­ety for Hu­man Re­source Man­age­ment in Alexan­dria, Va., have all signed on to a coali­tion of em­ploy­ers en­dors­ing a fed­eral re­peal of this un­equal tax bur­den ac­cord­ing to the Hu­man Rights Cam­paign Foun­da­tion (HRC). The leg­is­la­tion was orig­i­nally part of the health­care re­form, but was dropped dur­ing the rec­on­cil­i­a­tion process. In the mean­time, em­ploy­ers seek­ing to be on the cut­ting edge of di­ver­sity and in­clu­sion prac­tices will find ways to close this gap for their gay and les­bian em­ploy­ees, bet­ter en­sur­ing equal pay for equal work.

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