Same-sex married couples face a new reality in the current tax season: They die and pay taxes just like everyone else.
Since the 2013 tax year, married same-sex couples have been required to file their federal returns as married, even if they lived in states that did not recognize gay marriage.
But many non-marriage states did not allow these couples to file as married on their state income tax returns, and instead required them to file as single or head of household.
That changed last year when the U.S. Supreme Court handed down its decision in Obergefell vs. Hodges on June 26, making marriage equality the law of the land.
“Now same-sex married couples are treated the same as other married couples in terms of both federal and state income taxes,” Carol Calhoun, a benefits and tax attorney, said in a recent interview.
With Obergefell, same-sex couples who are married or plan to be must file both federal and state returns as married, whether jointly or separately.
“Domestic partners and those living together, however, must file as singles or heads of households,” she said
In addition, Calhoun said, previously non-marriage states must allow same-sex married couples to file amended returns to obtain a refund if they think they overpaid their state income taxes, and if they wish to do so.
This is one of several areas in which couples may want to seek professional advice, according to Calhoun, as each state has different requirements for requesting a refund, and some couples may have good reasons not to do so. Many couples, especially in previously non-marriage states, may need advice simply to get up to speed on filing income tax returns as married.
The differences among states regarding income tax prior to Obergefell can seem mindboggling. Before the decision was handed down, Calhoun conducted a study of states’ stance toward same-sex marriage for state income tax purposes.
She found that eight states did not recognize same-sex marriage, but conformed to federal tax law: Georgia, Kentucky, Kansas, Louisiana, Missouri, Nebraska, North Dakota and Ohio.
Arkansas, Michigan and Mississippi banned same-sex marriage and did not conform to federal tax law. As a result, same-sex married couples had to file as single.
In Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, same-sex marriage was a nonissue either because these state had no income tax or because the state taxed only interest and dividends and did not provide a separate rate structure for single and married taxpayers.
The remaining states allowed same-sex marriage, and because of that, same-sex couples could file as married.
Calhoun said some same-sex couples may even seek counsel on whether to marry, and how doing so would affect their income tax. If they do marry, should they file separately or jointly?
For example, couples with widely disparate incomes would likely owe less income tax by filing jointly rather than as unmarried single taxpayers or as married filing separately.
But if both people in a relationship are high earners, it may be to their advantage to remain unmarried as they would owe more in taxes if they were wed.