No quod sanctus instructior ius, et intellegam interesset duo. Vix cu nibh gubergren dissentias. His velit veniam habemus ne. No doctus neglegentur vituperatoribus est, qui ad ipsum oratio. Ei duo dicant facilisi, qui at harum democritum consetetur.
This past June, New York became the 6th state to legalize same sex marriage. Regardless of ones individual beliefs concerning same-sex marriage, this much is clear: Tax laws–which are already complex & confusing–are that much more baffling for same-sex couples. This is mainly due to the fact that the Federal Government does not recognize same-sex unions. Same-sex couples must file separate federal returns, however they can file jointly in New York State and some other states that recognize these unions.
“What was supposed to be this way of expressing our love was going to seriously confuse our taxes, investments, estate planning, really all our finances,” says [Maggy] Porter, a registered nurse. “Our CPA is great, but even he seems pretty bewildered”
While marriage can save heterosexual couples a bundle, it could cost same-sex couples thousands of dollars in extra taxes and professional advice…
“Filing taxes for same-sex spouses is much more complicated, more expensive and time-consuming, and there is very little guidance from the IRS or elsewhere,” says Pan Haskins, a certified public accountant in San Francisco.
While the makers of popular do-it-yourself tax programs like Turbotax & H&R Block are modifying their programs to navigate these complex rules, financial planners are recommending that same-sex couples hire a tax professional to navigate these tax labyrinths:
New York State advises couples do two sets of federal returns — official individual returns for each partner, and a dummy return as if the pair were filing jointly. The joint return is “not to submit but to use it as a work sheet so that you are bringing the correct income information onto a joint state return,” says Ed Walsh, spokesman for the state Department of Taxation and Finance.
Some same-sex spouses are fed up enough to submit that joint federal return. Haskins reports, in her experience, the IRS has so far not challenged same-sex married returns. (IRS forms don’t ask for gender identification.) But she warns couples who file federal returns jointly that they risk financial penalties and a potential audit. “This,” she says, “is still the Wild West of financial planning.
CONSIDER HOLDING ASSETS JOINTLY: Income or expenses from joint assets can be allocated all or in part to either owner’s return.
INCOME: (e.g. interest, dividends, capital gains) may be shifted to the partner with the lower income, while deductions (e.g. mortgage interest, real estate taxes, capital losses) may be claimed by the partner in the higher income tax bracket. This could lead to tax savings for both partners.
TAXES ON HEALTH INSURANCE: Unlike heterosexual marriages, employer-based health coverage for same-sex spouses is not tax-exempt, and employers must report it as income to the IRS.