Edited by Mikkel Hyldebrandt
Tax season can feel overwhelming, but with the right preparation, you can ensure you get the most out of your return. For members of the LGBTQ+ community, certain tax considerations might not always be top of mind, but they can make a significant difference when it comes to maximizing deductions, credits, and refunds. Whether you’re filing as an individual, a couple, or a business owner, here’s how to make tax season work in your favor.
1. Know Your Filing Status
Your filing status plays a huge role in determining your tax liability and potential refund. If you’re legally married, you and your spouse can file jointly, which often leads to better tax benefits than filing separately. However, if your income levels or deductions make it more beneficial to file separately, consider running the numbers both ways before making a decision.
For transgender individuals whose legal gender marker has changed, it’s crucial to ensure that your tax return matches Social Security Administration records to avoid processing delays.
2. Take Advantage of Marriage Benefits
LGBTQ+ couples who are legally married are entitled to the same tax benefits as heterosexual couples. This includes higher income thresholds for tax brackets, increased deductions, and eligibility for certain credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit.
If you were married within the tax year, ensure that you update your records accordingly and account for any changes in income, health insurance, or employment that may impact your return.
3. Deduct Out-of-Pocket Medical Expenses
Medical expenses can add up quickly, and the IRS allows you to deduct qualifying medical expenses that exceed 7.5% of your adjusted gross income. This includes costs related to gender-affirming healthcare, fertility treatments, mental health therapy, and HIV/AIDS-related care.
If you’ve spent money on surgeries, hormone therapy, or other medically necessary treatments, be sure to keep records and receipts. Many LGBTQ+ individuals may overlook these deductions, but they can make a significant impact on your tax return.
4. Claim Dependents If Applicable
Many LGBTQ+ individuals and couples serve as guardians, caretakers, or legal parents to children or other dependents. If you provide more than half the financial support for a dependent, you may be eligible to claim them on your return, potentially qualifying for tax credits such as the Child Tax Credit or the Dependent Care Credit.
Additionally, if you have dependents who are not legally recognized as your children but whom you financially support, check if they qualify as dependents under IRS guidelines.
5. Maximize Work-Related Deductions
If you are self-employed or run a small business, there are multiple deductions you should take advantage of, including:
- Home office deductions (if you work from home)
- Business expenses (advertising, software, office supplies)
- Healthcare premiums (if you pay for your own insurance)
Freelancers and independent contractors in the LGBTQ+ community who operate their own businesses should also consider contributing to a retirement plan like a SEP IRA or a Solo 401(k) to lower taxable income.
6. Look Into Adoption and Fertility Treatment Credits
Starting a family can be a costly process, especially for LGBTQ+ parents who turn to adoption or assisted reproductive technology. The IRS offers an Adoption Tax Credit, which can help offset expenses like agency fees, legal costs, and travel expenses.
Similarly, while fertility treatments are deductible as medical expenses, some states offer additional credits for IVF, surrogacy, and other family-building costs. Be sure to check both federal and state tax codes for potential savings.
7. Check for State-Specific LGBTQ+ Tax Benefits
State tax laws vary widely, and some states offer additional benefits for LGBTQ+ families, domestic partners, or those with specific medical expenses. Research your state’s tax policies or consult with a tax professional who is knowledgeable about LGBTQ+ issues to ensure you’re taking full advantage of any available benefits.
8. Protect Yourself from Discrimination
While the IRS is legally obligated to process all tax returns fairly, LGBTQ+ individuals should still be aware of their rights. If you encounter a tax preparer who appears biased or unknowledgeable about LGBTQ+ tax issues, seek out an inclusive tax professional or utilize services from organizations like the National LGBTQ Task Force or Lambda Legal.
9. File Early and Stay Organized
Filing early not only helps you get your refund faster but also reduces the risk of identity theft. Keep detailed records of income, deductions, and credits throughout the year to make the filing process smoother.
Utilizing tax software or hiring a professional can help ensure accuracy and maximize your return. There are also LGBTQ-friendly tax preparers who specialize in addressing the unique financial situations of the community.
Final Thoughts
Taxes may not be fun, but they don’t have to be a headache. By staying informed, keeping good records, and taking advantage of available deductions and credits, LGBTQ+ individuals and families can maximize their returns and reduce their tax burdens. Whether you’re filing for the first time or you’re a seasoned taxpayer, these tips will help ensure you keep as much of your hard-earned money as possible. Happy filing!