taxes

Supreme Court eliminates state tax-filing hassles for same-sex married couples

Gay couple reading laptop in kitchen © iStock

The U.S. Supreme Court decision in Obergefell v. Hodges to legalize same-sex marriages across the United States is a major win for married gay and lesbian taxpayers.

Since 2013, same-sex couples have been able to file a joint tax return to report and pay their federal taxes. However, many of the couples still had to fill out state returns as if they were single taxpayers because their states did not allow or recognize their marriages.

Now joint tax returns can be filed at all levels, unless, of course, the couples find they get a better tax result by submitting their taxes as married filing separately. The bottom line is that there is tax-filing conformity for all married taxpayers nationwide, regardless of sexual preference.

State of celebration

Gay and lesbian couples received good federal tax news shortly after the Supreme Court's June 26, 2013, decision that invalidated the part of the Defense of Marriage Act, or DOMA, that defined marriage as between one man and one woman. Following that ruling, the IRS announced that it would implement a "state of celebration" standard when it comes to federal return filing.

State of celebration refers to the jurisdiction in which the couple was married, meaning the same-sex pair can file their federal taxes as married even if they live in a state that does not recognize their marriage.

"Traditionally, the IRS has not used state of celebration, but the state of domicile for its rulings," says Kyle D. Young, CFP professional and Accredited Domestic Partnership Advisor at the Schmitt-Young Investment Group of Wells Fargo Advisors in Short Hills, New Jersey. "It is a huge win for married couples."

State and federal tax return conformity, 2015 tax year filing

No state income tax on wages
Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming
State tax on interest and dividend income only
New Hampshire, Tennessee
State tax return starts with federal adjusted gross income and then applies one rate
Illinois, Indiana, Michigan, Utah
State starts with federal taxable income and then applies one rate
Colorado
State starts with federal taxable income and then applies its own rates to federal brackets
North Dakota, Vermont
State starts with federal taxable income and then applies its own rates and brackets
Minnesota, South Carolina
State starts with federal adjusted gross income and then applies its own rates and brackets
Arizona, California, Connecticut, Delaware, Georgia, Hawaii, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, Montana, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Virginia, West Virginia, Wisconsin
State starts with federal gross income and then applies its own rates and brackets
Massachusetts, District of Columbia
State income tax calculation does not reference federal return
Alabama, Arkansas, Mississippi, New Jersey, Pennsylvania

Source: Tax Foundation

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