At Tax Time, Gays May Find the True Meaning of the ‘Marriage Penalty’
For the first time, legally wed same-sex couples who file as ‘married’ on their federal income tax returns, may find the true meaning of the marriage penalty. Couples must file as married in 2013, even if you live in a state that does not recognize same-sex marriage.
The ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
There could be some benefits to filing jointly. Deductions or credits that can now be claimed. But there’s a chance couples may wind up paying more, especially if they’re both in a high income bracket. For example, with their incomes combined, they might hit the threshold for the extra Medicare taxes or the beginning of the phaseout of deductions and the standard exemption.
However, if one partner is in the low-income range and the other is the high range, they’ll probably see some benefit, and now Estates of legally married same-sex couples will be treated the same as opposite-sex couples. They can pass on their estates to their surviving spouse without it being taxed. In addition, health insurance purchased from an employer for a same-sex spouse can be paid pretax and excluded from income.
Like opposite-sex couples, gay and lesbian married couples can qualify to use the head-of-household status, when kids are involved, where the spouses are living apart, and they also have the option of filing amended returns going back to 2010, using the married-filing-jointly status.
When filing state returns, couples living in states that don’t recognize gay marriage will likely have to file as singles. Each state gets to make up its own rules for filing state income taxes, and in some cases, those rules are still in flux. Some states have created new forms for same-sex couples to use if they file a joint federal return. And in Missouri, same-sex couples who are legally married elsewhere can file joint state tax returns.
It seems like a big complicated mess, and it looks like tax preparers will be the ones who benefit because of the extra time and paperwork that couples will require. Hopefully, this extra expense will qualify as a tax-deduction.
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