Facebook has joined a group of forward thinking companies supporting families of their gay workforce. Domestic partners won’t have to pay the extra tax that comes along with their health insurance benefit. Gay couples fortunate enough to work for employers that extend health insurance to domestic partners are at a disadvantage because they are taxed on the value of that coverage – a tax that is not paid by their heterosexual married colleagues.
A spokesman for Facebook said that employees’ W-2 forms would be adjusted so that they wouldn’t have to pay for the extra tax. In other words, their income will be increased just enough to cover the extra costs. Major global financial service – Barclays and Google added a similar policy this year. A handful of other large organizations, including Cisco, Kimpton Hotels and the Gates Foundation also cover these costs.
Under federal law, employer-provided health benefits for domestic partners are counted as taxable income, if the partner is not considered a dependent. The tax owed is based on the value of the partner’s coverage paid by the employer.
As a result, employees with domestic partners will pay about $1,069 more a year in taxes, on average, than a married employee with the same coverage, according to a 2007 report by M.V. Lee Badgett, research director of the Williams Institute, which studies sexual orientation policy issues