Should Same-Sex Couples File Tax Returns?

  1. Jill Andrews
  2. November 6, 2017 3:37 pm

Should Same-Sex Couples File Tax Returns?

Have you ever wondered if same-sex couples should file tax returns? How does the government handle incomes made by same-sex couples? Are gays and lesbians given financial privileges? Many straight peers have doubts on federal and state taxes for same-sex partners. They believe that gays and lesbians are given interesting benefits. In simpler terms, the consider gays and lesbians as civil union partners or domestic partners. Well, reality is different! Same-sex couples should follow many rules and regulations like their straight peers. In fact, they should file state tax returns every year.


What do the Records Read?

According to Federal rules, same-sex couples are treated as partners only if marriage was registered and celebrated. It doesn’t depend on where the partners are living. The Federal Government expects states and local authorities to approve same-sex couples who are officially married. The state should celebrate same-sex marriages and approve the couple for federal taxes. This is also known as the “Celebration Rule”.

The actual phrase in the Revenue Ruling between 2013 and 2017 reads: “Couples who are married of the same sex will be lawfully approved if the marriage is recognized and approved by the state. Even if the state domiciles the couples, the marriage will be legally recognized. The marriage duration depends on the year and the date. If you were married on the 31st of December 2015, you will be considered as married for the entire year. For Federal tax purposes, you will be a year into marriage. There are many options for same-sex couples. Partners can choose from “Head of Household”, “Married Filing Joint” or “Married Filing Separate” filing status.


The Significant Differences

There are many differences between Civil unions, domestic partnerships, and marriage. First of all, civil unions and domestic partners are not couples. They are not married for tax benefits or federal purposes. “Marriage” is not a part of civil unions, domestic partners or similar relationships in the Revenue Ruling between 2013 and 2017. These relationships are not dominated by love or marriage. This is why civil union and domestic partners can choose from Head of Household or Single tax filing status.

When same-sex couples file for tax returns, the following factors must be remembered:

  1. The marital status of the same-sex partners is decided by the state laws. It depends on the state where the couples are living.
  2. Most states expect same-sex partners to file separately or jointly.
  3. If the state doesn’t approve same-sex marriages, the partners must file separately. They will be treated like unmarried individuals.
  4. Before you file taxes, the local rules and community laws should be reviewed. If you live in a state that doesn’t recognize same-sex relationships, you must review if the community law applies to each person or not.
  5. In non-recognition states, you should check if there are protective claims. By definition, the protective claim is a procedure that is defined by the state. It formally defines how taxpayers can refund on future happenings. Most states use protective claims to preserve the rights of same-sex couples for refunds. With the help of protective claims, unmarried same-sex couples can be converted to married filings.

By the end of 2016, the Supreme Court advised many circuits and overturned state-level restrictions on gay and lesbian marriages. Today, Wisconsin, Oklahoma, Indiana, Virginia, Utah, South Carolina, Wyoming, Kansas and West Virginia approve same-sex marriages. This clearly means same-sex couples can file tax returns. They will be given a guidance chart on how to make accurate filings.


A Quick Walk through Tax Options for Same-Sex Couples

Regardless of the sex, both gays and lesbians have three different possibilities.

  1. Same-sex couple scan combine their deductions and incomes to one. They can file the tax returns together. There are many advantages in making joint filings. One, there will be a single tax return. But, both the partners must take responsibility of the tax payments and returns.
  2. Same-sex couples can file separately. This becomes relevant when both the partners have a stable income. Filing separately has few drawbacks. That is because the tax incentives are different for separate filers. Yet, you will be responsible for your tax returns.
  3. Same-sex couples can use “Head of Household”. This is where both the partners file separate returns.


The Ultimate Bottom Line

Same-sex or not, you should file tax returns. Remember, every state has specific rules and regulations on how to file tax returns.