Same-Sex Couples This Tax Season
Last updated on January 20, 2023
Married same-sex couples will need to do a little more to file their tax returns this tax season than their straight counterparts. Many same-sex couples that are also required to file state taxes will need to prepare three tax returns: one for the IRS, one for the state and another pro forma or ‘dummy’ tax return for the state. WRCBtv tries to see the method in the madness:
“Here’s 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.’
“There 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.
“‘As 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.’
“Gregory 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.’”
State income taxes complicate matters further. As each state is free to determine the tax filing rules, same-sex couples will need to determine how they need to file taxes this tax season. Some states have created new forms for same-sex couples. The result is confusion for same-sex taxpayers. WRCBtv explains just how bad it is:
“‘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 further notice.’
“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.”
Same-sex couples need to ensure that they file their return accurately. Hiring a professional tax preparer might lighten their burden, but it is important that they know their rights and their liabilities. Seeking help from the IRS or tax professionals may help them to file correctly.
Recent Posts
- Tax Implications of Selling a Home in 2024
- Maximizing Your Tax Refund: Deductions and Credits You Shouldn’t Miss
- How the Foreign Account Tax Compliance Act (FATCA) Affects Expats
- IRS Notices: What They Mean and How to Respond
- Essential Tips for Filing Your Taxes Early and Error-Free
- Tax Breaks Every Homeowner Should Know in 2024
- What to Do if You Owe Back Taxes: IRS Debt Relief Options
- How to File Taxes as a Small Business Owner: A Complete Guide
- How to Identify Tax Scams and Avoid Fraudulent Tax Relief Companies
- Seeking Help for Back Taxes Relief