Same-Sex Couples in Non-Recognition States Required to Prepare Multiple Federal Tax Returns

I haven’t posted in a while, as is usual for this time of year. The New Year signifies many things for many people. For me, it mostly signifies the beginning of tax season. This year, there are also significant changes for me personally. I have moved on from my previous firm and started my own. I am now offering services through Advocate Accounting, LLC. This is an exciting new change for me and I hope the New Year is just as promising for you.

When it comes to taxes, as always, there are important year-end changes of which you should all be aware. The media coverage of the recent Supreme Court (SCOTUS) decision on DOMA has been widespread. I posted about it when it occurred back in August. An avalanche of rights have since been awarded to same-sex couples. Among these is the right, and requirement, to file your Federal income taxes as Married Filing Joint (MFJ) or Married Filing Separately (MFS).

The IRS’ decision to use the “place of celebration” definition of marriage was a big win for the community. It means that same-sex married couples (SSMCs) will be recognized as married if they have a marriage license from any marriage state, regardless of where they live. This has both positive and negative tax effects at the federal level. Luckily, there are accessible resources explaining both.

At the state level, however, the effects are less known and highly variable. If you are a SSMC living in a state that recognizes your marriage (or you live in a non income-tax state) you have nothing to worry about. Those who have a legal marriage but reside in a non-marriage or non-recognition state are in a different boat, though, and are subject to yet another tax inequity.

Most income-tax states require that a taxpayer submit a copy of their federal tax return along with their state return. The numbers from the state-submitted 1040 are used to calculate the state tax. Before the DOMA decision, SSMCs in marriage/recognition-states had to prepare three 1040s – two Single returns to be submitted to the IRS and another “dummy” Joint return to be submitted to the state. This was the case in states such as Oregon and California where joint filing was available with the state, but not with the IRS. A reverse situation now applies to a far greater number of taxpayers.

If you are married, but live in a non-recognition state, you may now be faced with the burden of preparing three Form 1040s. You will need to file one MFJ return, to be filed with the IRS, and two Single “dummy” 1040s to be filed with the state. Lambda Legal has an excellent list of marriage rights by state that can be found here.

Despite the enormous progress that has been made, inequity still abounds. Many attorneys speculate that a new SCOTUS case will emerge within the next 18 months. The clear deficiency of the decision is an issue that people will not ignore. Brace yourself, the marriage equality fight is far from over.

Thank you to our current and former team members and colleagues for helping us develop this content.

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