By Gideon Alper
Marriage equality has come a long way, but when it comes time to do your taxes, the federal government still treats married same-sex couples as single. That’s because of the Defense of Marriage Act, or DOMA, which prevents the federal government from recognizing same-sex marriages. However, the time of the federal government not recognizing legal same-sex marriages may soon be coming to an end.
The Supreme Court is set to announce its decision on the constitutionality of DOMA in the next few weeks. Most constitutional scholars predict that the Court strikes down the provision that prevents the government from recognizing same-sex marriages, though of course nobody knows for certain.
The fall of DOMA could affect the taxes of married gay and lesbian couples differently, however, depending on what state these couples live in. Some couples actually live in a state that allows same-sex marriage, while other couples travel to one of these states to get married, while still living in a state that disallows it.
Couples that Live in a State Where Same-Sex Marriage is Legal
The big change for couples that live in a state allowing same-sex marriage is that couples would be able to file their federal taxes jointly.
As a practical matter, this is a huge relief. Instead of often needing to do three separate returns (one for each partner for federal taxes, and then a joint one for state taxes), only one tax return would be needed.
Will it save these couples money? Maybe, maybe not. As a general rule, the more unequal the incomes between spouses, the more money they save on taxes by filing jointly instead of separately. In fact, with similar incomes, they may pay more in taxes than they do now filing separately.
Couples That Live in a State Where Same-Sex Marriage is Still Illegal
Unfortunately, most of the country still doesn’t let gay and lesbian couples get married. Many of these couples still take a weekend trip to New York or D.C. to get married anyway. What will happen to the way they do their taxes if DOMA is taken off the books?
IRS regulations say that state law controls whether couples are married for federal purposes. But which state law applies? There are two possible answers:
Answer one, and probably the most likely scenario, would be the state where you live. If this becomes the rule, then even if, for example, a Florida couple goes to a different state to get married, the federal government still would not recognize their marriage even after DOMA repeal because Florida itself would not recognize the marriage.
That means no federal benefits, no joint filing of taxes, no potential financial savings, and so on.
Answer two: the state where you get married. Under this rule, the laws of the state of celebration, or in other words, where the marriage took place, would control whether the federal government recognizes the marriage. As long as the marriage was legally and validly performed in a state, then the federal government would recognize the marriage. Even if you lived in a state, like Florida, that does not recognize the marriage.
This kind of rule would be complicated. That’s because state tax returns are often based on federal tax returns. It would be unclear how to complete, for example, a Texas state tax return, as single individuals, if the federal return was filed jointly. This ambiguity is similar to what couples in gay marriage states face right now when filing their federal tax returns.
In the past, the IRS was faced with a similar question when deciding how to deal with recognizing common law marriages. A common law marriage is an old, traditional form of marriage that many states used to allow. It occurred when a man and woman lived together and openly held themselves to the public as a married couple. The IRS decided that as long as the common law marriage legally existed in the common law marriage state, then the IRS would recognize it, even if the couple moved to a state that did not recognize the marriage. This principal could apply to same-sex couples married in a state that offers gay marriage but living in a different state.
So what to do as a practical matter? If DOMA is ruled unconstitutional, the government will need to issue regulations to address which state law controls. Until then, couples in a state without gay marriage could try filing jointly and see what the IRS will do. The answer may then be left to the courts.
Gideon Alper is a same-sex couples attorney in Orlando, Florida, helping people throughout the state with LGBT adoption and domestic partnerships. Website: www.galperlaw.com