August 30, 2013
Nanette Lee Miller, Leader of the LGBT Practice Group, Featured in The New York Times Article "Gay and Married Couples in New Land of Taxation"
By Tara Siegel Bernard
It's now official: same-sex married couples across the country are allowed to check one of the "married" boxes on their federal tax returns, even if their own state doesn't recognize their union.
Many of those couples who fought long and hard to win that right may pleasantly find themselves paying Uncle Sam far less and may even get a refund from previous years. (But plenty of others will pay more.)
The Internal Revenue Service this week set down the rules that will cost or save a particular couple money. That will depend on how much they earn, whether both spouses are working, and whether, together, they earn too much to claim the same sort of tax-saving deductions and credits they did when they were filing as singles (many of which phase out as income rise).
The rules also begin to clarify how couples residing in the 37 states that do not sanction same-sex marriages will fare. (Warning: Filing state returns won't be easy, but not so bad that you’ll consider moving.)
WHAT ABOUT STATE TAX RETURNS? If you live in a state that recognizes your union, your life just got much easier. Couples residing in places like California, Massachusetts or New York can file a joint federal tax return as well as a joint state return, just as opposite-sex couples do.
But it's not entirely clear what will happen in each of the states that do not recognize same-sex marriage, experts said, since some states require that a taxpayer's state return filing status mirror their federal return. "I love that state taxing authorities are having to wrestle with this," said Patricia Cain, a professor at Santa Clara University School of Law and an expert on sexuality and federal tax law. "It does remain to be seen, but it is likely that you won't be filing jointly at the state level" if your state does not recognize your union.
If that's the case, filing your state tax return will become more cumbersome. Each spouse will probably need to fill out a dummy federal return as if they were filing on their own (either as single or head of household) and then transfer the information on that return to their state return, which also must be filled out as single or head of household, according to tax experts. "It will be awkward, it will be time-consuming, but not necessarily difficult," said Nanette Lee Miller, who leads the lesbian, gay, bisexual and transgender practice at Marcum, an accounting firm.