Income Tax Filing Status for Same Sex Married Couples - John R. Dundon II, Enrolled Agent
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Income Tax Filing Status for Same Sex Married Couples

Income Tax Filing Status for Same Sex Married Couples

The following states recognize same sex marriages:  Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and District of Columbia.  In the most recent Supreme Court decisions that I blogged about earlier a great deal of disconnect surrounding the following sentence was brought forth and follow up I felt is both important and required.

“Legally married same sex couples are taxed in the same manner as legally married opposite sex couples.” 

On one hand this sentence brought relative clarity to the treatment of estate tax matters as the decision was relevant to the treatment of a taxpayer’s ESTATE TAX.  In that there is a huge difference between estate tax and income tax I for one am not completely comfortable assuming that this sentence applies automatically to income tax statutes and regulations, particularly the definition of filing status without first understanding how specifically the IRS responds.

Because of the decision handed down by the Supreme Court in the Windsor Case there are many questions yet to be answered regarding the treatment of INCOME TAX by the IRS.  Also confusing matters is the fact that marriage of a same sex couple is separate and distinct from civil unions or other similar state provisions regarding unions.

Many income tax prognosticators are saying that because of the recent Supreme Court decision an income tax return for a married individual MUST be filed based on the individual’s correct marital status regardless of what the existing statutes and regulations state.  I think taxpayers need to slow down a bit and wait for the IRS to catch up.

In that billions if not trillions of tax dollars could be involved here relevant to many aspects of our tax system including gift splitting, phase-outs of IRAs, treatment of rental losses, additional Medicare Tax, income tax brackets, Earned Income Credit, Education Credits and deductions, Estate Taxes, and the definition of Filing Status, I am advising people to wait for the IRS to accordingly respond as the definition of Married as a filing status was in place long before DOMA and the IRS has a long history of being reticent to change under any administration or court directive.

The absolute safest way to proceed is to wait for the IRS to officially answer some very pointed questions before actually filing a Married/Joint tax return as a same sex couple. The questions that I am waiting for answers on include:

  1. When will the IRS redefine the Married Filing Joint (or Separate) Filing Status for federal income tax filing purposes?  Regardless of what the US Supreme Court decided it does not automatically require the IRS to immediately change its current definition of Married Joint/Separate filing status.  As of the writing of this post President Obama has asked the Justice Department to ‘work with’ all agencies (including the IRS) to implement changes relevant to the recent Supreme Court decision.  This DOES NOT MEAN that the IRS has to for income tax filing purposes in tax year 2013 changed the definition of Married Joint or Married Separate filing status.  In fact as I understand matters (I am not a constitutional legal expert by any means) the IRS can maintain the definition in question of Married and force the President to mandate a change.  IF this happens it will take time and the 2013 tax returns are due on April 15th 2014.  I just don’t see the definition changing that quickly.

  2. Will a couple married in one state still be considered married if they move to a state that does not recognize the marriage?  Basically the basis of this question will probably distill down to whether the IRS recognizes marriage based on the State of the taxpayer’s residency or the State of the taxpayer’s marriage celebration.

  3. Will the IRS REQUIRE returns still open under the statute of limitations to be amended to reflect the correct legal filing status of Married Filing Joint or Married Filing Separate?  If so this could be a bonanza for tax practitioners.

  4. Does an incorrect filing status invalidate any originally filed income tax returns?  I only hope it does not get this complicated as that will impact all sorts of other questions including issues surrounding statute of limitations.

Basically there is a great deal of contradictory information floating around by ‘tax experts’ with many letters after their name and it is both confusing and frustrating.  Until the IRS responds it is all little more than posturing and conjecture as well as an opportunity for practitioner fraud and abuse.

The safest way to proceed as a taxpayer is to follow the current tax laws and rules for income tax filing purposes which as of now defines Marriage as a union of one man and one woman.  Will this change?  Probably, eventually.  Until it does though resist the urge to succumb to the overtures of aggressive interpretations of how the Supreme Court decision in question impacts federal income taxes, particularly filing status.