Part 1: FAQ for Same-Sex Spouses – Filing Your Income Taxes

This is part one of a two-part series answering frequently asked tax questions for same-sex married couples.

The 2013 Supreme Court decision in United States v. Windsor held that the federal government would recognize same-sex couples who were validly married under state law as being married under federal law also. Currently, there are 17 states that have legalized same-sex marriage, either through court decision, legislature, or popular vote and 33 states without marriage equality.  The differing state laws complicate filing federal and state income tax for same-sex couples who are legally married.

The following are some of the most frequently asked tax questions for married couples:

Q: Can same-sex spouses file federal tax returns using a married filing jointly or a married filing separately status?

Yes. In fact, for tax year 2013 and moving forward, same-sex spouses must file federal returns using either “married filing separately” or “married filing jointly.”  Couples who were married before the 2013 legalization may also amend some previously filed returns, reflecting the married status, if they believe they are due a refund for years that they had been married without federal recognition.

Q: What are the advantages and disadvantages of separate and joint filing status?

Larger standard deductions, tax credits like the Earned Income Tax Credit, the American Opportunity and Lifetime Learning Credits and the Child and Dependent Care Credit are some advantages of joint tax filing. Couples who file joint returns also receive higher income thresholds for taxes and phaseouts, meaning they can earn more money and still qualify for some tax breaks.

However, filing separately may help you to save on your tax return. If you and your spouse make a similar income, you may be able to avoid landing in a higher tax bracket by filing separately.  Additionally, filing separately allows you to match your income against your deductions.

Q: What is a couple’s “state of celebration” and how does it differ from “state of residence?”

A “state of celebration” is the state or country where the same-sex couple was legally married.  The “state of residence” is where the same-sex couple lives.  Tax and other governmental authorities can apply rules based on whether a couple is legally married or whether the state itself recognizes marriage.

Q: What is the difference between federal and state tax compliance?

Tax rules are determined at both the federal and state level.  Recognizing that validly married couples may now live in a state that does not recognize marriage equality, the IRS adopted the celebration rule.  Therefore, same-sex married spouses need only to decide if they will file jointly or separately on the federal level.

State tax compliance varies from state to state. For example, Florida, which does not recognize same-sex marriage, is one of six states in the U.S. without an income tax, so the issue will not arise. In five other states, same-sex marriage is not recognized, and there is no conformity between federal and state taxes. Same-sex couples in these states will be required to file their state income taxes as if they were single and their federal income taxes as a married couple. Still, other states do not recognize marriage but allow for consistent filing with the federal government. If you are unsure about your state’s income tax laws, visit your state government’s website to learn more.

Q: Can individuals in civil unions or registered domestic partnerships file federal tax returns as married filing jointly or married filing separately status?

Individuals in registered domestic partnerships and civil unions are not married under state law, so they may not file federal returns using a married status. Therefore, couples in domestic partnerships and civil unions must file their federal tax returns as single.

Ignorance is not an excuse for failing to file or incorrectly filing your income taxes with the federal or state government. If you would like more information or assistance with income tax filing, please contact us.

In my next blog post, I will answer common questions about estate and gift taxes for same-sex spouses.