Something new, exciting and a bit scary is coming this tax season for
some same-sex couples across the country: For the first time, they will
file as "married" on their federal return.
This new policy will simplify the process for preparing federal taxes, but it may boost some couple's total tax liability.
the new IRS policy: If you were legally married in any state or foreign
country on the last day of 2013, you are married for tax purposes. The
rules only applies to couples who are legally married. The IRS does not
consider domestic partnerships or civil unions to be marriages.
"This is regardless of where you now live," said Jonathan Horn, a CPA in Manhattan and chair of a tax panel at the American Institute of CPAs. "You must file as married in 2013, even if you live in a state that does not recognize same-sex marriage."
could be some benefits to filing this way: deductions or credits that
can now be claimed. But because of the so-called "marriage penalty" —
something straight couples know all about — you may wind up paying more.
a general rule, if there are two partners with a high income, they'll
probably see a slightly higher tax liability," said Bob Meighan, a vice
president at TurboTax. "Whereas, if one is in the low-income range and the other is the high range, they'll probably see some benefit."
Hullender and Eric Wong live in Seattle and work in the computer
industry. They were married in November of 2013. They realize they might
pay a bit more this year, but they're not really worried about it.
"There is something exciting about this; it makes the process
complete," Hullender said. "We will file one return this time and can
stop attempting to track who owns what assets."
And then there are state income taxes Same-sex
marriage is not legal in a majority of states. If a gay couple was
married in one state but lives in or moves to another that does not
recognize their marriage, each spouse may have to file a "single" state
income tax return.
"It's a patchwork of rules out there right
now," Meighan said. "If you're in a state that recognizes same-sex
marriage, that's good news. If not, are they going to honor the federal
requirement for joint-filing or are they going to require the partners
to file separately?"
Each state gets to make up its own rules for
filing state income taxes, and in some cases, those rules are still in
flux. Some states have created new forms for same-sex couples to use if
they file a joint federal return.
"I see a tremendous amount of confusion," said Janis Cowhey McDonagh, co-leader of the LGBT Practice
group at the accounting firm Marcum, LLP. "People don't understand what
their state requires, even if it recognizes their marriage. And things
keep changing, so there's a lot to keep up with."
For example, a
federal judge recently overturned Utah's ban on same-sex marriages. A
later ruling blocked that decision until it could be appealed by the
state. Between those two rulings, more than 1,000 same-sex couples
married in Utah.
Last week, Utah's governor sent out a memo that
said, "State recognition of same-sex marital status is ON HOLD until
But U.S. Attorney General Eric holder said the federal government will recognize those marriages, so those Utah couples married by December 31 will file as married on their federal return.
Related: Feds side with same-sex couples in Utah
Taking a look at past returns Couples
who have been married in a state that recognized gay marriages before
2013 should look at their prior returns to see if they should refile
"You're not obligated to amend prior
returns, but some couples might find that it's beneficial. You can do
that for three years," explained Annette Nellen, director of the graduate tax program at San Jose State University.
"For example, if two years ago, one spouse had a big capital gain and
the other had a big capital loss, they can amend that year's returns —
to change to a joint return — and use the loss against the gain."