The Effect of Publication 555 from the IRS

The right wing often claims that gays get equal rights with laws around domestic partnership and civil unions, and they don't need marriage for equality. I've been battling a side effect of domestic partnership and civil unions laws which are supposed to take the place of being able to get married, and provide me with equal protection. But unfortunately of course they don't.

In particular the problem I'm facing is a side effect of Publication 555 from the IRS which I've written about before. I'm trying to refinance our primary home this month to take advantage of the low interest rates. But I'm running into an issue because of the way our 2010 tax returns look due to Publication 555 from the IRS. While its intent was good, in trying to make taxes look similar to what married couples have to do, it had the by-product of also making my income "look" smaller, essentially disqualifying me for a refinance. Married couples don't have this issue because they get to file their taxes using the category "married filing separately", a category that domestic partners aren't allowed to use.

It's an additional problem for us because we have our home titled in a trust. We do it this way because it's the only way to reduce the tax consequence of passing on a home if one of us should pass away. But due to marriage laws, only one of us is allowed to be named on the trust, unlike married couples where both parties can be on a living trust. So for us, I'm on the trust, and my domestic partner is the beneficiary. This way if I die first, my partner gets the property and the tax savings, and if he passes away first, then nothing changes and beneficiary of the trust becomes our daughter. But using a trust means the mortgage and property are only titled in my name rather than both of us. So doing a refinance in both our names to alleviate the 2010 reduced income tax return issue isn't really an option either.

Basically you're screwed financially if you can't get married, at least in trying to reduce your interest rate in a refi, and trying to get lower taxes on inheritance through a trust. Gay people can't have it both ways, while married people can.