Even though more states than ever now recognize gay marriage, the federal government and the state of Texas still do not — and it could cost same-sex couples some serious cash.
That’s because the power of the IRS, when it comes to joint tax returns, is tied to the Defense of Marriage Act, a 1996 federal law defining marriage as the union of one man and one woman. So even if the state where the same-sex couple lives acknowledges the pair as married, a joint federal tax return is out of the question.
By not checking the “married filed jointly” box on their tax returns, same-sex couples might pay as much as $6,000 more a year in taxes than heterosexual couples would, a study shows.
For example, when a same-sex couple checks the box “head of household (with qualifying person)” and not “married filing jointly,” the pair automatically finds itself with a greater tax liability. Also, standard deductions for filers who do not itemize their deductions often are less for head of household filers and joint filers.
Heterosexual families also have greater benefits when it comes to child tax credits, in many cases.
Then there are the other tax liabilities, as well as hidden costs.
Same-sex couples, for example, don’t receive the same exemptions that married couples do when it comes to taxes on inheritances and gifts. They also could find themselves paying more capital gains taxes when they sell a house.
And hidden costs come with the paperwork, as gay couples who live in states that recognize same-sex marriage must fill out more returns, often necessitating the services of a professional tax preparer.
But hiring a professional tax preparer or tax attorney could have long-term benefits, as it could ensure that tax returns are filed correctly, which would mean fewer hassles from the IRS.
Source: CNNMoney, “Same-sex spouses lose big on taxes,” Blake Ellis, Dec. 26, 2011