September 13, 2013
Nanette Lee Miller, Leader of the LGBT Practice Group, Featured in Bloomberg Article "Same-Sex Married Couples See New State-Law Tax Complexity"
By Richard Rubin
Kat Morgan will check a "married" box on her federal tax return next year for the first time since her 2009 wedding, now that the Internal Revenue Service will recognize same-sex marriages no matter where couples live.
Her South Carolina income tax return will be another matter, because of the state's constitutional prohibition against treating her marriage as legal. She and her wife, Daena Petersen, will probably need to create dummy federal tax returns used only to fill out separate state tax forms, on which they will each declare themselves single.
"Everybody has their opinion on the moral issue," said Nanette Lee Miller, national leader of the accounting firm Marcum LLP's practice for lesbian, gay, bisexual and transgender clients. "But everybody has an opinion that nobody should have such craziness on their taxes."
Beyond tax filing status, states will have to consider other ways in which marriage affects the definition of income.
For example, many companies offer health benefits to the same-sex spouses of their employees. Until the IRS decision, those payments were treated as taxable income.
Now, they won't appear on the W-2 form that companies submit to the federal government, meaning that states that want to continue taxing that income must tell businesses to keep reporting the income to the state.