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All Legal Same-Sex Marriages Will be Recognized for Federal Tax Purposes

Sunday, September 1st, 2013

The Department of the Treasury and the IRS announced last week that all same-sex marriages will be recognized for federal tax purposes. That means that if you are in a legal same-sex marriage, you must file as married filing jointly or married filing separately (with few exceptions) beginning with the 2013 tax year. What does this mean? Let’s look at this in a Q&A format:

I’m in a legal same-sex marriage in a state that recognizes same-sex marriage. Will I file as Married in 2013? Yes, you must file as either married filing jointly (MFJ) or separately (MFS) on both returns.

I was married legally (in a same-sex marriage); however, I reside in a state that does not recognize such marriages. How will I file? For federal tax purposes, you will file (in 2013) as married (MFJ or MFS) on your federal return. You will likely file as single (or Head of Household if you qualify) on your state returns. The state filing will depend on your state’s policies–it’s too early to state this for sure.

I’m in a Civil Union. How will I file? A civil union is not for federal tax purposes a legal marriage. Nothing has changed for you.

Do I need to amend my earlier tax returns to show my marriage (assuming you were married in an earlier year)? You can if it benefits you but you do not have to. That’s per current IRS guidance. The 2010-2012 tax years remain open and can be amended (it’s possible some older years are also open for some taxpayers).

Will filing as married benefit me on a tax basis? Probably not. It may make you feel better (from the standpoint that the US government recognizes your marriage), but there are many “marriage penalties” built into the Tax Code; ObamaCare only exacerbates this issue. You will likely find your tax bill will go up.

I live in a community property state. Will my marriage follow community property guidelines? Yes. There’s nothing in the Treasury/IRS notice stating that a same-sex married couple would be treated differently from any other married couple. That means if you live in one of the community property states (AZ, CA, ID, LA, NV, NM, TX, WA, and WI; AK allows it though separate property is the norm), you will follow community property rules.

While I expect more guidance in the future from the IRS, last week’s announcement paves the way to how the 2013 tax year will go for most same-sex married couples. The biggest takeaway for most same-sex married couples is that you will be filing as married on your 2013 tax return.

DOMA Done, But Don’t File that Joint Return Just Yet

Wednesday, June 26th, 2013

The US Supreme Court ruled today that the federal Defense of Marriage Act (DOMA) was unconstitutional. That makes it appear that same-sex couples should be able to file joint tax returns. There’s only one problem: The IRS computers likely would reject such a return if it were filed today.

Suppose Jane and Susan are a legally married same sex couple. They are both on extension for this year. They hear about the decision today and think, “Great! We can efile our returns jointly, both federal and our state.” While legally I believe that’s correct (unless their state has some other law prohibiting same-sex married couples from filing jointly), the IRS computers haven’t been reprogrammed yet to take the return. I would urge same sex couples to wait for the IRS to acknowledge the ruling and an IRS announcement stating that IRS computers are now ready to accept such returns. I suspect it will be two months (maybe more) before the IRS is ready to accept such returns.

Let’s assume Jane and Susan efile their return today. Six weeks later their return is rejected, and they each get notices mailed to them. On the day Jane and Susan receive their notices the IRS announces they’ve reprogrammed their computers and same sex couples can now file jointly. Jane and Susan can’t just refile their return–they’re in the notice stage. They’ll each have to reply to the IRS. It would be a huge mess.

This is definitely a case where waiting for the IRS will make impacted couples lives far, far easier. As usual with the government, it’s hurry up and wait.