Carrie addresses the most frequently asked questions about same-sex couples and income taxes.
Same-Sex Couples and Income Taxes
Frequently Asked Questions (FAQs)
The laws recognizing same-sex marriage are changing as we speak! With recent court rulings and legislative efforts, 33 states and the District of Columbia now recognize marriage for same-sex couples and their families. In addition, a handful of other states offer some civil recognition for such couples under other legal definitions, such as civil unions. This count has climbed rapidly in 2014, and numerous states have pending litigation in the courts that may result in even more recognition of same-sex marriages!
What does this all mean for same-sex couples filing their income taxes? It depends, in part, on where you live. In this blog post, I intend to answer some of the most frequently asked questions based on my significant experience and knowledge gained as an Iowa-based tax and financial planning professional. I know it may be hard to remember, but I am proud that my home state of Iowa was one of the first to establish marriage equality after a historic Iowa state court ruling in 2009. At that time, couples residing in Iowa could legally marry, and file their state return jointly, but were required to file separately (as single individuals) for their federal return. Today, I am working with more couples in opposite circumstances. After a historic Supreme Court decision in 2013 and new guidance from the IRS and Department of Treasury, married same-sex couples (married in a state that recognizes such unions) may file a joint federal return no matter where they live, even if their home state still legally regards them as separate.
As a supporter of marriage equality, I’m passionate about helping couples navigate this confusing filing process, no matter their state of residence (I file taxes for residents of any state and have clients across the country); and assisting them to file in the way that is most advantageous to their situation and family circumstances.
Please keep in mind, this is general information. It should not be considered specific legal advice. If you would like specific advice for your particular situation, please contact me directly. Also, please remember that these laws and regulations are changing it seems almost daily, so check back with my blog in a few months when I will provide an update.
Q: I am legally married. What filing status do I use?
A: On your federal income tax return, you will use Married-Filing-Jointly or Married-Filing-Separately. You may choose the status that is most advantageous for your federal tax situation. For your state income tax return, your state filing status will depend on your state of residence.
If you live in Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming, you don’t need to file at all. You don’t have any state income tax! Lucky you!
If you live in a state that recognizes same-sex marriage (currently Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia and Wisconsin as well as the District of Columbia), you will use the same filing status as you elected for you federal income tax return (either Married-Filing-Jointly or Married-Filing-Separately).
If you live in Missouri, which does not allow same-sex couples to marry, but does recognize same-sex couples from other jurisdictions, you will use the same filing status as your federal return.
If you live in any other state not listed above, married same sex couples, even if married in a state that recognizes such unions, must file individually. In such cases, each individual will file his or her own state return as either “Single” or “Head-of-Household.”
Q: I was legally married in another country. How should I file?
A: A legally married same-sex couple, where the marriage occurred in another country, is treated the same for income tax purposes as if they were legally married in state that recognizes such unions. As such, the same answers listed above also apply to same-sex couples legally married in another country.
Q: May we amend previous years’ tax returns?
A: Yes. If you were legally married in a previous year, but had to file as Single or Head-of-Household, you may now amend that return to claim a Married filing status. This may be advantageous to some taxpayers but not others - same-sex married taxpayers may find that their tax bill will actually be higher, due to the so-called “marriage penalty.”
Q: When may we amend previous years’ returns?
A: The deadline to amend previous years’ tax returns is three years from the original due date of the return (including extensions). For example:
Your 2011 return was due 4/17/12. You have until 4/17/15 to amend your return. If you filed an extension, you have until 10/17/15 to amend the return.
Your 2012 return was due 4/17/13. You have until 4/17/16 to amend your return. If you filed an extension, you have until 10/17/16 to amend the return.
Your 2013 return was due 4/15/14. You have until 4/15/17 to amend your return. If you filed an extension, you have until 10/17/16 to amend the return.
Q: I was in a civil union, and was required to file as Single for 2012. May I amend my return for that year?
A: You may file an amendment only if your state now recognizes that union as a marriage. Each state should be evaluated for its option to convert a civil union to marriage or the effective date of marriage.
Q: I will get money back if I file an amendment for 2012, but I will have to pay if file an amendment for 2011. Do I have to file amendments for every open year?
A: No. You may file amendments for any or all of the years you choose. Keep in mind that amended returns for “back-dated” marriages or converted civil unions are untested and circumstances may vary by state. This is new territory for the IRS. I’m here to help!
Q: Are there other tax implications?
A: Yes. There may be gift and/or estate tax implications. You may file form 843 – Claim for Refund and Request for Abatement. Additionally, you may have been taxed on benefits paid by your employer for your spouse. In such cases, you should request a corrected W-2 from your employer in order to prepare your amended return.
Q: How can I find out more and stay current on the changes in tax regulation concerning same-sex couples?
A: Many resources are available:
Your tax professional. Due to the complexities and changing nature of this area of tax regulation, find a professional who both has experience with same-sex married couples and is credentialed. An Enrolled Agent is a tax specialist who has earned the IRS’s highest credential.
The IRS (www.irs.gov) and Department of Treasury (www.treasury.gov).
Lambda Legal (www.lambdalega.org), a national organization committed to achieving full recognition of the civil rights of lesbians, gay men, bisexuals, transgender people, and those with HIV through impact litigation, education, and public policy work.
My blog! (www.houchinswitt.com/blog/) I will continue to write on this topic as laws and regulations are changed and updated.