Tax Complications for Same-Sex Couples in Utah (and Elsewhere)

By :: January 15th, 2014

The battle over same-sex marriage in Utah not only raises important questions about marriage law; it also further complicates income tax filing for gay couples who tied the knot during the few weeks when those nuptials were deemed legal.

The problem: While federal courts hash out the legality of Utah’s same-sex marriages, gay couples who married in Utah must file state income tax returns as individuals but federal returns as married.

After a U.S. District Court judge ruled on December 20 that the Utah law barring same-sex marriages violated the U.S. Constitution, roughly 1,300 couples hurried to tie the knot. Just 2½ weeks later, the U.S. Supreme Court stayed further marriages until lower courts could rule on appeals. But the justices said nothing about the validity of the marriages that had already taken place.

In the absence of a court order, Utah Governor Gary Herbert (R) ordered state agencies to ignore the marriages. U.S. Attorney General Eric Holder Jr. took an opposite tack and ruled that federal agencies, including the IRS, should recognize the marriages as valid.

The conflict means same-sex couples who married during the hiatus will have to prepare at least three federal tax returns. First, they’ll have to file a federal 1040 as married (two if they file separately). Then they’ll have to prepare two more as individuals to use as the basis for their Utah state returns. For most of those couples, the biggest challenge will be determining how to divide joint income and costs between spouses. (Note that all unmarried couples with jointly held assets face this problem, regardless of sexual orientation.) Tax preparers or tax software will take care of the actual calculations.

Utah might have chosen an easier path for same-sex couples. In Missouri, Governor Jay Nixon (D) decided that state law requiring taxpayers to use the same filing status for both state and federal tax returns trumps the state’s constitutional ban on same-sex marriages. Missouri taxpayers who were legally married in another state or country must file federal returns as married and thus, by the governor’s order, must do the same with state returns. Colorado will follow a similar approach.

This is not a problem in the District of Columbia or the sixteen states that allow same-sex marriage because federal and state tax filing requirements do not conflict. Nor is it a problem in Oregon, which prohibits same-sex marriages in the state but recognizes those performed elsewhere.

And there’s no difficulty in the eight states that neither allow same-sex marriage nor have a state income tax. But the rest of the states deny same-sex marriages and make state tax filing more difficult for same-sex couples.

Maryland attorney Carol Calhoun has put together a nice summary of how state laws align with the federal income tax for same-sex couples. Here’s her scorecard:

Table-same-sex marriage and taxes-b.1-15-14.trimmedBottom line: Tax filing for same-sex couples will remain needlessly complicated in one-third of the states as long as state and federal returns treat their marriages differently. The Supreme Court dodged the constitutionality of state bans on same-sex marriage last summer (Hollingsworth v. Perry). But the Utah controversy could soon land back in the lap of the justices, giving them another chance to settle the marriage dispute and the related tax issues.


  1. Michael Bindner  ::  12:51 am on January 16th, 2014:

    Sadly, the DOMA case only applied to federal actions because only federal tax issues were at stake. While the arguments of the case could justify eliminating the part of the law that allows state governments to ignore gay marriages elsewhere, because it was not at issue it was not touched. Someone in the conflicting states could very well challenge that part of the Act by brining this legislation forward. In the Proposition 8 case, released the same day, the Court did not touch the question of gay marriage as a civil right – mostly because it did not have to. I suspect, quite rightly, that they fear that a constitutional convention called to reverse such a ruling (because Congress would never draft such an amendment – they don’t have the votes) would go after them, as there are a list of “constitutional convention” activist amendments that would do just that. As for calculating income by couple and as individuals – Virginia does that now and has the most gay marriage unfriendly constitutional amendments in the nation. We do the separation here as part of filing for the spousal income credit – which is designed to correct for the marriage penalty. States with similar provisions will still require gay couples to separately compute income -even if filing jointly. Frankly, it is not that hard unless you have a shared business. It is actually rather easy to stack up W-2s or put them in separate columns in Excel when calculating income.

  2. Morgan  ::  1:00 pm on January 16th, 2014:

    “For most of those couples, the biggest challenge will be determining how to divide joint income and costs between spouses. (Note that all unmarried couples with jointly held assets face this problem, regardless of sexual orientation.)”

    That is true, but unmarried couples with jointly held assets are not forced to BOTH itemize or BOTH take the standard deduction when filing as single, which can cause quite a tax hit when only one of you can claim mortgage interest etc.

  3. Utah Lets Same-Sex Couples File Joint Tax Returns | Collins Consulting Service  ::  5:09 am on January 23rd, 2014:

    […] I discussed in my last TaxVox post, the governor ordered state agencies to ignore same-sex marriages performed in Utah during the […]

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