How to Do Your Taxes if You’re a Same Sex Married Couple

Alden Wicker
Posted

It’s been another banner year for gay rights, with Maine, Maryland and Washington saying “I do,” to same-sex marriages. Plus, more same-sex legislation is currently moving through the Rhode Island legislature.

But there’s still a shadow hanging over these celebrations: In the eyes of the federal government, gay Americans are still single.

If you’re gay and married, that means when you pay taxes, you’re considered single. (And that’s only the beginning. When it comes to Social Security survivor benefits and insurance benefits from your federally employed partner, you’re also still single.)

There are two things you should know:

  • This makes your taxes more complicated, and hence might require you to hire an accountant and/or pay more in fees for them to wade through the situation.
  • According to an analysis by H&R Block, same-sex couples pay as much as $6,000 more in taxes than heterosexual couples.

That certainly shouldn’t stop you from getting married. But you probably have questions about what else you need to know if you’re a Mrs. and Mrs. or Mr. and Mr. during tax time. We’ll walk you through how to do your taxes right:

Consider Hiring an Accountant

First, you might consider hiring an accountant. To decide, you can start with the free Ace Your Taxes Bootcamp, which has a quiz that will tell you whether you need an accountant. Unless the results of that quiz are that you definitely don’t need one, you should consider getting one that is familiar with same-sex partnerships. There are several reasons why:

  • They will be familiar with the intricacies of your state laws, which vary widely.
  • If you live in California, Nevada or Washington, an IRS rule allows registered domestic partners and legally married same-sex couples to split their income, which will have tax implications that a tax accountant can work through.
  • You might be subject to the marriage penalty, where combining your finances would bump you into a higher bracket. An accountant can run the numbers for you and tell you whether to change your withholding for next year.
  • An accountant can advise you on long-term concerns about special tax penalties related to shared finances and estate taxes, and how to avoid them.

RELATED: Estate Planning for Same Sex Couples

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Check Your State Laws

Some states recognize same-sex marriages, while some see them as civil-unions or domestic partnerships, and in others, of course, they are outright illegal. Here are the definitions:

  • Civil unions are legal contracts between partners that are recognized as having all or some of the rights of marriage, but without the historical and religious connotations.
  • A domestic partnership is between individuals who are living together but are not joined in any type of legal partnership, marriage or civil union. It recognizes the contribution of one partner to the property of the other.

Your exact state laws will affect a wide range of issues surrounding taxes, from what filing status you will use, to how your insurance benefits are taxed. You’ll have to do research into how your state treats your relationship (domestic partnership, marriage or civil union) and whether your state allows you to file a joint return.

One Couple, Four Tax Returns

If you’re in a state that allows you to file jointly with your partner, the two of you will have to file four tax returns altogether:

  • One federal tax form for you
  • One federal tax form for your partner
  • One “dummy” federal tax form together so you can reference it when you fill out …
  • One joint state return together

Find out more about what forms you need.