When the U.S. Supreme Court struck down a central provision of the Defense of Marriage Act last June, it opened the door for government agencies – including the Internal Revenue Service and Treasury Department – to begin recognizing legal same-sex marriages for federal tax purposes. That was great news for gay couples living in states where marriage equality had already been legalized, unlocking the full trove of spousal rights and benefits previously denied to them. But for married gay couples living in a majority of states, where same-sex nuptials have yet to be embraced, it wasn’t exactly a “happily ever after.”
While the Obama administration plans to treat all marriages equally this tax season, many same-sex couples are left to navigate a confusing patchwork of state marriage laws. It’s when these laws intersect – and often, contradict – federal tax law that April 15 becomes a lot more complicated.
On the 2013 federal income tax return, any legally married same-sex couple can use either the “married filing jointly” or “married filing separately” status. But depending on which state a couple lives in, they may have to file separately at the state level or fill out extra forms – a process that carries added costs in terms of time and money, and greater chances of making a mistake.
“For people who live in states that don’t recognize same-sex marriage, you now have the reverse problem of what used to exist,” said Anthony Infanti, a law professor at the University of Pittsburgh and an expert on the application of tax law to gay couples. “They could usually file as married for the state, but had to file two single returns at the federal level. It created all sorts of problems – from increased costs to increased risks for audit.”
Now, said Infanti, the tables have turned. Some states that don’t recognize same-sex marriage still require the taxpayer to use the same federal filing status on their state returns. That means couples who file as married on their federal returns have to fill out two additional “dummy” returns as single people, and attach them to their separate state returns. For those keeping track, that’s five tax forms per couple, but only three that end up getting filed. And that’s not even counting the people who have to file additional returns for working outside the states where they live.
“I’ve just been furious over this,” said Claude Summers, who married his husband, Ted-Larry Pebworth, one day after the DOMA ruling came down. The two wed in Massachusetts, but live in Louisiana, which does not recognize their union.
“Louisiana uses the federal adjusted gross income,” said Summers. “Now, to file with the state is going to be a process of creating dummy fed forms to get that number, and then filing on the basis of the dummy numbers… It’s a hassle, and I think clearly unconstitutional.”
Summers isn’t alone. In February, the nonprofit group Forum for Equality Louisiana filed a federal challenge to the state’s ban on recognizing same-sex marriages. In particular, the civil lawsuit argues that it’s unconstitutional for Louisiana to bar same-sex parents from putting both names on their child’s birth certificate, and to refuse gay couples the right to file jointly on their state income taxes.
To avoid the headaches, some states – like Colorado, Oregon, Missouri, and Utah – have declared that they would recognize same-sex marriages solely for the purpose of tax returns. If the goal was to avoid litigation, however, it didn’t work. Several Missouri residents filed a lawsuit against Gov. Jay Nixon’s administration, arguing that allowing same-sex couples to file jointly violates the state’s constitutional provision defining marriage as between one man and one woman.
“It really is a struggle,” said Sarah Warbelow, legal director at Human Rights Campaign. “Until every state in the country permits same-sex couples to marry, there is going to be unfair tax burdens on same-sex couples who are legally married but living in a nonrecognition state.”
It’s not just the process of filing tax returns that has yet to unscramble. Some same-sex couples still lose out on certain federal benefits – chiefly, tax breaks for married couples and Social Security survivors’ benefits – that hinge on where the couple lives, regardless of where they celebrated their marriage. In other situations, same-sex couples filing jointly at the federal level actually end up owing more to the government because their combined income bumps them up to a higher tax bracket.
“Filing jointly at the federal level, while making your life easier, doesn’t necessarily mean you get a benefit out of it,” said Infanti. “You can, but it depends on individual situations.”
In order to address the federal benefits that turn on place of residence, gay rights activists have been urging the government to adopt “place of celebration” rules as broadly as possible. That would decrease the number of federal benefits same-sex couples are denied by living in a state that does not recognize their union.
To a large extent, federal agencies have done just that. But one step activists would like to see Congress take on the issue is to pass the Respect for Marriage Act, which would establish universal place of celebration rules, and repeal DOMA from the books entirely – not just the central provision that the Supreme Court struck down.
“[The Respect for Marriage Act] is very important for providing consistent treatment, but logistically, it would be easier too for the federal government to operate in a world in which there was universal place of celebration,” said Ian Thompson, legislative representative for the American Civil Liberties Union. “Same-sex couples then wouldn’t have to be in situations where for some purposes, they’re recognized as married, and others, they’re not. There’s still inconsistent treatment of married same-sex couples, which is both unfair for the couples and logistically challenging for the federal government.”
And yet, despite all the confusion, extra time, and – in some cases – little in the way of actual perks, many same-sex couples have still found value in being able to file their federal taxes together for the first time.
“It had a lot of symbolic weight, and was strangely enough romantic,” said Summers, who at the end of the day, expects the five returns he and his husband filled out will be something of a financial wash. “It certainly feels like a very tangible recognition. You’re a couple, your financial status is linked. So yes, that was a big thing.”