Bill Kelly legally married his husband, Bob Taylor, during the 142-day window that the state of California allowed same-sex marriages in 2008. While it was a happy occasion, the financial entanglements that followed haven't been as enjoyable.
In 2010, the IRS issued rules requiring same-sex married couples in community property states, such as California, to divide their income equally on their federal tax returns. The new rules help some same-sex couples -- who still can't file jointly -- but they have confused the filing process even further for others.
Kelly's husband owns a translation business. But since Kelly wasn't involved in the company, he never reported the income on his tax return.
As a result of the new rule, Kelly was required to claim half of the income from his husband's business as his own last year. When the income showed up on Kelly's tax return for the first time, the IRS reported it to Social Security which determined that he was no longer eligible for the early retirement he had successfully claimed the year before. Social Security then asked him to repay the $10,000 in benefits he had already collected.
Kelly was lucky enough to find a pro bono tax lawyer that could help him appeal the ruling in September. After nine months -- during which time he also recruited help from both his district city councilman and state representative -- he and his husband finally got the case absolved this month. But he worries that many other same-sex families are still facing the same nightmare.
"Our nine-month journey to Hell and back was an arduous, expensive, time consuming and an emotionally draining experience," he said.
Advocates are hopeful that President Obama's decision to support same-sex marriage will bring gay couples one step closer to equal treatment on taxes, Social Security and other important financial matters.
