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Baltimore & Towson Lawyer Discusses Tax Issues In Domestic Partnerships.

Written by Amar Weisman » April 13, 2016 »

Tax time is here again and many Maryland couples are working to ensure they take advantage of all possible tax incentives that may be available to them. In particular, domestic partners in Maryland may be wondering how the tax rules may affect them this tax season. As your Towson family attorney knows, many couples throughout the state and worldwide choose to cohabitate instead of marry for a variety of reasons. Still, it is important for individuals living as domestic partners to understand the rules with respect to their tax responsibilities.

Things You Need to Know This Tax Season

First and foremost, domestic partners in Maryland do not share many of the same tax advantages of married couples. Take, for example, the tax exemption related to inheritances. For many years, married couples in the state have enjoyed the benefit of an inheritance tax exemption; however, the laws did not provide that same exemption to domestic partners -- at least prior to 2009. What that meant for domestic partners during that time was that they would be responsible for paying inheritance tax on any and all property that was left to them by their deceased significant other.

As of 2009, the laws changed to permit domestic partners to enjoy a number of property tax exemptions. That said, for those couples who still choose to remain unmarried, they may be able to inherit certain kinds of property without the worry of incurring tax liability after their loved one dies.

More on the Inheritance Tax

Generally speaking, under the law, an inheritance tax is placed on “the clear value of property that passes from a decedent to some beneficiaries.” In Maryland, the tax is collected by the Register of Wills in the county where the deceased individual lived or owned the property. While many couples may consider the change to be trivial, domestic partners should be aware that inheritance tax rates vary -- and some may be as high as 10 percent or more.

For someone who has just lost their loved one, the thought of possibly being required to pay a $10,000 tax on a house worth $100,000 can be devastating. Moreover, it should be noted that the exemption protects only those partners who shared and owned their primary residence as joint tenants.

A Brief Look at the Maryland Family Law Tax Consequences Related to Health Plan Benefits

You should also be aware that domestic partners are not automatically eligible for pre-tax health benefits under the Internal Revenue Code. Certain criteria must be met in order to qualify; so domestic partners are encouraged to speak with either their family attorney or a knowledgeable tax professional to learn more about their legal options in this regard.

Those couples who do not meet the criteria set forth by the IRS will be required to treat the amount of the state’s subsidy for the coverage as taxable income. It is evident that the tax consequences faced by domestic partners can be quite extensive. If you have questions about your tax obligations and/or the tax-related laws governing your specific situation, contact the Law Offices of Amar Weisman, LLC.

Call (410) 321-4994 For a Free Consultation WIth a Towson & Milford Mill Family Law Lawyer.

Call The Law Offices of Amar S. Weisman at (410) 321-4994 to schedule a Free Consultation. The Purpose of the consultation is to determine whether you want to retain this law firm as your Baltimore County & Harford County Family Lawyer. If you do wish to proceed, then you must pay a retainer. See Our Policy on Fees and Costs. The family firm is located next to The Circuit Court for Baltimore County, at 1018 Dulaney Valley Road, Towson, MD 21204. We represent clients throughout the Baltimore metropolitan area including Aberdeen. Abingdon, Annapolis, Baltimore, Bel Air, Catonsville, Cockeysville, Edgewood, Essex, Glen Burnie, Lutherville, Owings Mills, Parkville, Severna Park,Towson, Westminster and White Marsh. We also have extensive experience representing out-of-state clients.