Guidance is Still Needed for Same-Sex Couples Tax Returns

As a result of the Supreme Court decision in the United States v. Windsor, same-sex couples who are married will now be using the same filing status as traditional married couples, at least on their federal income tax returns.

Same-sex married couples are now required to file their federal income tax returns as either Married Filing Jointly or Married Filing Separately.  The IRS has issued a comprehensive list of frequently asked questions (FAQs) which address the more common issues. However, concise guidance is not yet available on all areas relating to same-sex married couples, such as how to treat alimony payments between former same-sex spouse, or how to treat property transfers between same-sex spouses. We expect additional clarification in the upcoming months.

Civil unions and registered domestic partnerships are not recognized as a marriage for federal tax purposes.   The IRS has also issued a comprehensive list of FAQs for taxpayers who are part of a civil union or a registered domestic partnership.  More than two-thirds of the FAQs for registered domestic partners relate to community property rules for registered domestic partners who reside in community property states.

Members of civil unions and registered domestic partnerships will continue to file separate individual income tax returns at the federal level, regardless of the filing status requirements in their state of residence.

Filing status rules at the state level will vary widely for same-sex couples for 2013.  There are 11 states which either require or allow joint tax returns for civil unions or domestic partnerships; despite being required to file as single status for federal income tax returns.

There are 35 states which ban same-sex marriages, of which 24 currently couple their state income tax return to the taxpayer’s federal income tax return.  We expect guidance from these states regarding matching of federal and state return during processing.

It is possible, many of those states will require the state income tax return prepared as single or head of household, using recomputed federal AGI and deductions as though the federal income tax return was prepared as either single or head of household.

For more information, contact Padgett Business Services in Bothell, Washington at (425) 408-1695. We handle your accounting, tax (personal & business) and payroll needs – so you can focus on what makes you money. Serving Bothell, Lynnwood, Kenmore, Mill Creek and surrounding areas.

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