The IRS' decision Aug. 29 to extend same-sex marriages the same federal tax-filing status treatment as heterosexual marriages regardless of where the couples live does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
But because the Internal Revenue Service did not recognize that joint state filing, they had to do added work to complete their state returns. This was because most states use taxpayers' federal returns as the basis for filing a state return.
In order to have the correct numbers from a federal return to plug into a joint state return, same-sex couples had to fill out a fake federal Form 1040. That dummy federal joint return was used as the basis for their state taxes.
That meant four returns: one joint state filing, a fake federal joint return and two single federal 1040s for each partner. If the couple uses a tax professional, that extra tax work meant additional costs for the taxpayers.
The costs also went beyond just filing season.
"Most heterosexual married couples feel protected by tax laws," says Miller. But DOMA forced same-sex couples to be proactive. And that meant more planning and more professional fees in addition to the added tax considerations.
Before DOMA was invalidated, for example, when an employee covered a same-sex spouse on workplace health insurance, it was a taxable event to the partner who provided the coverage. That's an expense that heterosexual couples don't face, since the spouse in a man-and-wife marriage is part of the federally tax-free family coverage.
"That's typically between $3,000 to $5,000 a year," says Miller. "Some employers will gross it up to cover the tax, but others won't, so you have to be prepared for the expense."
Companies that "gross up" employee compensation build the tax cost of the added income into the payment so that when taxes are accounted for, the worker still nets the full amount of the intended bonus or benefit.
But if a workplace didn't add the extra money to cover taxes, that was one more cost and added tax planning for same-sex husbands and wives whose marriages weren't recognized by Uncle Sam.
Now, however, that's one tax matter that newly federally recognized same-sex couples don't have to worry about.