When the IRS decided to recognize all valid same-sex marriages, that meant all married couples must file together, even in Texas
Lerone Landis and Danny Valle married in Canada six years ago before their daughter was born. Valle has been filing as single and Landis as head of household, claiming their daughter on his taxes.
This year, they haven’t filed their taxes yet, and Landis said they aren’t sure whether they’ll file together.
“We’re just going to play around with it and see what benefits us,” Landis said.
Ron Allen, a CPA, said a number of married couples have come into his office and said they don’t want to change anything. They just wanted to continue filing as single.
“That’s not an option,” Allen said.
After the Defense of Marriage Act was declared unconstitutional last June, the IRS ruled that marriages performed in marriage equality states or in countries that issue licenses to same-sex couples would be recognized as married no matter where they lived. That means all couples who are legally married must file federal taxes as married.
Couples will have a choice of filing jointly or as married filing separately. Because Texas is not just a community property state, but also a community income state, Allen said most couples will file jointly in Texas. That’s because in Texas, the income must be split down the middle to file separately, and the tax rate for married filing separately is the highest rate.
CPA Alan Levi said some couples will pay the so-called marriage penalty filing jointly, but even then the rates will be lower than filing separately.
“Married filing jointly is generally the way to go,” Levi said.
Tax law was designed to benefit couples with one main breadwinner and one stay-at-home spouse. If one spouse isn’t working or was starting a business and had losses, the couple will benefit when filing jointly. A couple with comparable incomes will probably pay more than they did when they filed as single.
Levi gave another example of the marriage penalty that will be paid by high-income couples.
Under the Affordable Care Act, upper income couples will be paying a new tax beginning this year. A new Medicare tax kicks in on incomes over $200,000 for singles and $250,000 for couples.
So a couple earning $250,000 jointly will pay the new tax while two singles may each earn $200,000 — a total of $400,000 — before they’re taxed.
Some married couples did lose money in past years when they were prevented from filing jointly.
Those couples may file amended tax returns for up to three years. The couple must have been married by the end of the year being amended.
Levi said amended returns for 2010 must be filed by April 15. Only couples who will receive a refund should file an amendment. There’s no requirement to do so.
Allen said he’s already done a number of amended returns and said they can be tricky. He advised couples who might qualify to seek out a CPA who is experienced in same-sex marriage.
While there’s no rule about who will qualify for a refund, he said couples with a big variance in income, those with capital net operating losses carried forward or those where one spouse had capital gains and the other capital losses are those ones who benefited.
The rules apply only to those who are legally married, not to couples who like to refer to a partner as husband or wife and didn’t travel out of state to obtain a legal marriage license.
This article appeared in the Dallas Voice print edition February 21, 2014.