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Tax Problem Found for Civil Union Couples in Illinois

By Nottage and Ward on July 18, 2011

According to Illinois Radio Network, a problem has already been discovered in relation to taxes and civil union couples in Illinois, just one month after civil unions were made legal. The problem relates to income tax. Under state law, couples in a civil union are required to be treated the same as married couples, but there’s a catch.

Under tax law in Illinois, if a taxpayer files their federal income taxes separately, they are also required to file state taxes separately. Since federal law does not recognize civil unions, couples in a civil union have to file separate state tax returns. Since the health insurance benefits that a partner in a civil union receives for another are considered to be income and are taxed as such under federal law, and since the state applies the same figures, they are taxed under Illinois law, when it seems as though they shouldn’t be.

Lambda Legal, an organization working for civil rights on behalf of homosexual people, has urged the Illinois Department of Revenue to fix the situation. A spokesperson for the Revenue Department stated legislation will be needed, since the Illinois Income Tax Act was not amended to reflect the Civil Union Act. In relation to the health insurance dilemma, the spokesperson stated a law would be needed requiring employers to offer a statement to their employees that request it breaks out cash compensation against the imputed value of federally taxable health insurance benefits.

The Chicago civil union attorneys at Nottage and Ward are well-versed in the complexities of the new civil union law, as well as other family law matters. For over 20 years, our lawyers have practiced family law exclusively, giving us the knowledge and experience required to provide our clients with the effective legal representation they need. Call 312-332-2915 to learn more about how we can help you.

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