DOMA Dead

[joanmcq]

DexEA, I have to disagree that filing joint is advantages, the marriage penalty will cost same sex couples much more in taxes in situaltions where both work. They will no longer be able to file SINGLE or one HofH and the other SINGLE if thier resident state recoginizes their marriage.

John, as with everything else in tax law, it depends on the facts & circumstances. I'm in CA, and the community property split filings are just brutal to do. Most of my clients are middle income, and the difference between MFJ & two singles (or single/HOH) is negligible on way or the other and will more than be overcome by the decrease in return prep charges. Taxes are, for the most part, the least of my clients' worries in the matter. I have one couple whose taxes I got done right before the ruling. Their marriage penalty was over $13,000 due to amt, so we wanted to file with the community property split one last year. Are they pissed? No they are overjoyed because of the other 1,100 benefits of having a federally recognized marriage far outweigh the income tax considerations.

[Burke]

VA requires state returns use same filing status as federal (unless one is a non-resident). But they don't recognize same-sex marriages. Hooboy...ain't we got fun...

[John of PA]

I understand the state inplication. My comment that same sex couples are about to pay much more in taxes filing jointly is referring to the Federal Return. They will no longer be able to file as SINGLE if thier resident states recognizes same sex marriages, and thus be subject to the Federal "marriage penalty" of being in a higher tax bracket.

[DexEA]

DexEA, I have to disagree that filing joint is advantages, the marriage penalty will cost same sex couples much more in taxes in situaltions where both work. They will no longer be able to file SINGLE or one HofH and the other SINGLE if thier resident state recoginizes their marriage.

Not sure if I am misunderstanding you, or if my post was as clear as mud, because I think we are in agreement. Let me try again, there were several couples interviewed that stated they were happy, because they may now file MFJ and this would save them money, because currently they are losing out on many tax breaks by not being allowed to file MFJ.

I was confused, because off the top of my head I can’t think of any examples that could be more beneficial to file jointly, from the federal standpoint anyway.

[David1980]

I was confused, because off the top of my head I can’t think of any examples that could be more beneficial to file jointly, from the federal standpoint anyway.

You can't think of any examples that would be more beneficial to file jointly vs. two singles? What about where one spouse works and other doesn't, a stay at home wife or something. With no income the stay at home wife could file and get ... $0 back? File MFJ on the husband's return and now you've got an extra exemption, a higher standard deduction, and the tax rates are lower at the same amount of income (because the tax brackets increase at higher levels of income.)

[John of PA]

Yes thats a good example of benefiting from filing joint, unfortunately that scenario has become more the exception than the rule.

[John of PA]

My whole point is there are many if not most same sex couple filing as SINGE and they now will no longer be allowed to file SINGE. For those (which are most) where both are working, they will have a much higher tax bill. For those where only one of them works, then yes, they will now have a lower tax bill.

[Gary2]

Just to be clear, I think you'll find that many same sex couples, even in those states that have allowed marriage for some time, have chosen not to get married and will continue to file as single. Also, in comparing the tax costs, take into account any imputed income due to benefits that are no longer taxable due to the Windsor decision.

I haven't done the math on all our open years yet, but I'm pretty sure we will be netting a small but noticeable sum, even after paying back my balance due should we stick with MFS (due to the health insurance).

But like most people, taxes were not a consideration in our marriage decision.

[joanmcq]

I have one couple whose tax bill will be $13,000 higher MFJ than it was as Single/HOH with the community property split. They don't care one bit. The last few years of community property splitting are viewed as an unexpected bonus, not a right, and having their marriage recognized, their family unit validated, and having the additional 1,100 benefits trump a few grand in tax savings.

I do have one elderly couple that is grousing over their tax bill and won't get married.

But most are summed up by one who I had contacted yesterday to find out if they were domestic partners or married, and wrote back "we were RDPs, we got married today!".

[John of PA]

Thank you Joann, that was my point, many same sex couples are going to find a much higher tax bill now they have to file joint, just like traditional married couples do. There is much to hash out here, IRS has thier hands full sorting all this out.

[joanmcq]

Actually, there's no more sorting to do as far as my clients are concerned than if a heterosexual couple gets married. I'll file amended returns if it benefits them, and file joint from now on. Trust me, community property splitting for two single returns was and is a MUCH bigger headache for me, my clients and the IRS than filing a joint return will be.

[erchess]

Consensus

I think there is mostly consensus here. We seem to agree that lots of people think married couples always or usually save tax money compared to if they were not married and everything else was the same. We all agree that in terms of tax savings alone a married couple pays a tax penalty by and large if both are employed outside the home but save some if only one works outside the home. We all agree that there are many non tax reasons why a couple that is allowed to get married might choose to do so, even economic reasons. And above all what I am hearing is that I must wait an indeterminate period to find out the rules regarding tax filings of same sex couples in states like mine that do not currently allow same sex marriage and seem unlikely to change in the foreseeable future. From what is here I can't even tell a same sex couple whether if they went to say California and got married, they would be able to file Jointly even for Federal purposes much less State purposes.

[John of PA]

Very good summary Erchess.

[joanmcq]

CCH has released a decent analysis here: http://tax.cchgroup.com/downloads/fi...OMA-ruling.pdf

And yes, there are a lot of unanswered questions still. But most of my clients live, work, and were/are getting married in CA, so I'm going ahead and filing them joint as of now.

[tpnl]

Ohio requires . . .

you to file the same as you did federally. It will be interesting to see how my state deals with this issue. I already have a gay couple that is legally married and has relocated here. A mess I'm sure.