Tax Season and Same-Sex Marriages

Washington state became one of three states to approve same-sex marriages earlier this year.  When voters approved laws giving them the legal right to marry, many same-sex couples rushed to the courthouse to be wed. 

Although several states have given these couples the legal right to wed, federal laws do not recognize these marriages and with tax season arriving soon in the new year, same-sex married couples will not receive the same tax breaks that heterosexual married couples will.

The research director of the Williams Institute for Sexual Orientation Law and Public Policy at the University of California, Los Angeles, M.V. Lee Badgett said that the gap between state and federal laws as it pertains to same-sex spouses creates both a complicated and costly tax season for these couples.  “It’s certainly a big headache for people.  I’ve seen them reduced to tears.”

A Supreme Court decision on the issue, which could clear the way for the federal government to recognize same-sex marriages in those states where it is legal – Washington, Maryland, Maine Massachusetts, Connecticut, Iowa, Vermont, New Hampshire, New York and the District of Columbia – is not expected until June 2013.  If the court strikes down the Defense of Marriage Act and recognizes same-sex marriages, it would mean these couples could file joint tax returns and be eligible for not only tax breaks, but other government benefits, such as Social Security and spousal support, that heterosexual spouses enjoy.

As it stands currently, same-sex couples must first fill out a mock federal tax form as a married couple, which they use to file their state tax returns.  They then, must go back and file a second set of federal tax returns as if they were both single.

In community property states, couples are required to split their wages down the middle.  Same-sex partners who received health benefits from their spouse’s employer, are taxed on those benefits, whereas heterosexual spouses are not.  Many of the IRS rules pertain to marriage and same-sex spouses in federal eyes are not recognized as married couples and, thus, do not receive many of the benefits that heterosexual spouses do.

Because of the complexity of legal issues related to same-sex marriages, it is wise for a couple to seek advice from an experienced  attorney on the tax implications of their union before filing their taxes this upcoming tax season.

Original article here.