Some same-sex couples still struggle at tax time

Image Credit: Hector Mata/AFP/Getty Images

Image Credit: Hector Mata/AFP/Getty Images

From Marketplace.org, by Gigi Douban, Monday, March 16, 2015:

Last month, a federal judge made Alabama the 37th state where same-sex marriage is legal. Weeks later, the state Supreme Court put an end to that. Filing taxes as a same-sex couple is also confusing — not to mention costlier.

Eva Walton and Kathryn Kendrick dated for three years. They got married in Washington D.C., and last September, they had a big wedding in Sewanee, Tennessee.

Just a few years ago, there weren't many places where same-sex couples could get married, especially in the South. Since then, gay couples in dozens of states have gained the right to marry, the latest of which was — briefly anyway — Alabama, where Walton and Kendrick live.

“So the marriage equality boom that's happened since we started dating really opened up our options for what marriage would look like,” Walton says.

They had no idea what their taxes would look like. They spent most of last year in Georgia, where same-sex marriage still isn't recognized. They moved to Alabama in December and had one month of income there. Just as soon as she got W-2's in the mail, Kendrick got to work.

“I went onto TurboTax and you know you go through these series of questions, like, 'Have you had any major life events lately? Have you moved states? Gotten a new job? Purchased a house?' And you know, I was just marking yes to all of these things. Then it asked, "Is this a same-sex marriage?' When I selected yes," Kendrick says, “TurboTax said ‘You will need to download this file instead of continuing because you live in a state that does not recognize same-sex marriages.’ But federally you were recognized, and so it was just a separate packet and I couldn't continue doing the online registration.”

And that was the end of simple online tax returns.

“I just felt like it was completely unfair,” Kendrick says, "and I also thought, 'I have to hire someone to do this because I don't know if I'm going to get everything right.'”

It's frustrating, says Robin Maril, senior legislative council at the Human Rights Campaign. “It's been pretty confusing for a lot of folks given the patchwork of marriage laws.”

Federal taxes are pretty straightforward, the government has recognized same-sex marriages since last tax season. Things get muddy if a couple marries in one state, but lives in another where same-sex marriage isn't recognized, or when couples move from one state to another.

And they get even muddier in states like Alabama. The Alabama Supreme Court month halted same-sex marriages this month, just a few weeks after it complied with a federal judge's ruling to allow them.

But even when couples are clear on what to do, it's still a headache. “The biggest hurdle is couples that live in states that do not recognize same-sex marriage, they could be looking at filing up to five separate tax returns,” says Cindy Hockenberry from the National Association of Tax Professionals. 

Not to mention the worksheets, doing and undoing their federal returns to arrive at Adjusted Gross Income as singles and as a couple.

“Yup, more dividing more adding, more double-checking your calculations to make sure you didn't transpose numbers, put the wrong income on the wrong return, that kind of thing.”

There's more potential for error and preparing the returns costs more, she says. And figuring out who gets to claim the mortgage interest or the kids as deductions? It’s sound kind of like a divorce.

“It kind of is!” Hockenberry said. ”Because you're going from joint income to separate income.”