Some things change while others stay the same. The federal government, most states, and the District of Columbia have changed their laws to recognize all marriages, including those of same-sex couples. What hasn’t changed is the need for all individuals, including same-sex couples, to pay income taxes in compliance with applicable laws and regulations. But what ARE the applicable laws?
Married couples of any gender combination are required to file their income tax returns based on their marital status on December 31st, the last day of the tax year. The IRS and states that recognize same-sex marriage treat all married couples exactly the same, no matter who they are. Married same-sex couples living in states that do not recognize their marriage file their returns as “married” on their federal tax return, and as “single” on their state tax returns.
Sounds simple, right? Well, there are still some decisions to make. The rules are pretty complicated, so each situation requires some thought and review. Here are some general things to consider. Some of them could spur you to act now…or to seek the advice of a qualified tax professional.
Which “Married” Filing Status to Use?
Married couples can select from two filing status options – “married filing jointly” (MFJ) or “married filing separately” (MFS). All newly married couples and couples whose tax situations have changed should determine which filing status results in the lower combined tax liability. The IRS describes life events and how they can impact your income taxes at http://www.irs.gov/Individuals/Did-you-know-life-events-like-marriage,-birth-and-divorce-may-have-a-significant-tax-impact%3F.
You can estimate your tax liability for MFJ or MFS by using your last filed tax return(s) as a guide and referring to information available at www.irs.gov (e.g., Publications 17 and 501). State and local income tax information is available on each jurisdiction’s website. Or, this could be a good time to consult a qualified tax professional or financial advisor.
It’s important to note that selecting the MFS filing status limits or eliminates some income tax deductions or credits that are allowed for married couples filing jointly. For example, filing MFS eliminates the child care and earned income tax credits and the deductibility of student loan interest. In addition, both spouses must itemize their deductions if one spouse itemizes, even if taking the standard deduction would result in a lower tax liability for the second spouse.
Should You Amend Prior Returns?
Depending on the year in which you married, you may be able to amend prior year’s returns to claim the married filing status. Income tax returns can be amended up to three years after the original filing deadline (e.g., April 15, 2015, for tax years ending December 31, 2011). However, if amending to a MFJ or MFS filing status, this would result in a higher combined tax liability. You are not required to amend your returns. Again, this would be a situation in which a qualified tax professional or financial advisor can assist in the appropriate decision for you.
Next Step?
Getting married or having your marriage legally recognized is exciting. Learning about how it impacts your income taxes and what to do about it is just part of managing the changes in your life. Tax calculating tools and professional assistance are available to help figure out how marriage and taxes impact you and your spouse.
Married couples of any gender combination are required to file their income tax returns based on their marital status on December 31st, the last day of the tax year. The IRS and states that recognize same-sex marriage treat all married couples exactly the same, no matter who they are. Married same-sex couples living in states that do not recognize their marriage file their returns as “married” on their federal tax return, and as “single” on their state tax returns.
Sounds simple, right? Well, there are still some decisions to make. The rules are pretty complicated, so each situation requires some thought and review. Here are some general things to consider. Some of them could spur you to act now…or to seek the advice of a qualified tax professional.
Which “Married” Filing Status to Use?
Married couples can select from two filing status options – “married filing jointly” (MFJ) or “married filing separately” (MFS). All newly married couples and couples whose tax situations have changed should determine which filing status results in the lower combined tax liability. The IRS describes life events and how they can impact your income taxes at http://www.irs.gov/Individuals/Did-you-know-life-events-like-marriage,-birth-and-divorce-may-have-a-significant-tax-impact%3F.
You can estimate your tax liability for MFJ or MFS by using your last filed tax return(s) as a guide and referring to information available at www.irs.gov (e.g., Publications 17 and 501). State and local income tax information is available on each jurisdiction’s website. Or, this could be a good time to consult a qualified tax professional or financial advisor.
It’s important to note that selecting the MFS filing status limits or eliminates some income tax deductions or credits that are allowed for married couples filing jointly. For example, filing MFS eliminates the child care and earned income tax credits and the deductibility of student loan interest. In addition, both spouses must itemize their deductions if one spouse itemizes, even if taking the standard deduction would result in a lower tax liability for the second spouse.
Should You Amend Prior Returns?
Depending on the year in which you married, you may be able to amend prior year’s returns to claim the married filing status. Income tax returns can be amended up to three years after the original filing deadline (e.g., April 15, 2015, for tax years ending December 31, 2011). However, if amending to a MFJ or MFS filing status, this would result in a higher combined tax liability. You are not required to amend your returns. Again, this would be a situation in which a qualified tax professional or financial advisor can assist in the appropriate decision for you.
Next Step?
Getting married or having your marriage legally recognized is exciting. Learning about how it impacts your income taxes and what to do about it is just part of managing the changes in your life. Tax calculating tools and professional assistance are available to help figure out how marriage and taxes impact you and your spouse.