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Tax Day poses unique challenges for many married, same-sex couples

Suzanne Bryant, left, and Sarah Goodfriend, right, pose with their marriage license following a news conference, Thursday, Feb. 19, 2015, in Austin, Texas.
Suzanne Bryant, left, and Sarah Goodfriend, right, pose with their marriage license following a news conference, Thursday, Feb. 19, 2015, in Austin, Texas.
Eric Gay, AP

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Opponents of same-sex marriage want the court to send the issue back to the states. They note that recognition of same-sex marriage has spread largely through court orders, rather than the ballot box.

“It’s not about the rights of a handful of people who want to change the institution of marriage,” said Phil Burress of Citizens for Community Values, an Ohio group. “It’s about the will of the people.”

The benefits of marriage are a mixed bag when it comes to taxes. Some couples, especially those with disparate incomes, can lower their combined tax bills by getting married. Others pay a marriage penalty.

The vast majority of married couples in the U.S. file joint federal tax returns in which they combine their incomes, exemptions, deductions and credits to calculate their tax liability. But same-sex couples are not allowed to file joint tax returns in most states that don’t recognize their marriages. Instead, they have to unravel their finances and file separate state returns.

“So you have this one return that would normally give you the numbers to do your state tax return, but instead you have to split all your incomes again and pretend like you’re not married,” said Deb L. Kinney, a partner at the law firm of Johnston, Kinney & Zulaica in San Francisco.

“Your health care benefits will be taxed differently and your credits will be different. Your interest deduction could be different, and then you have to go through the allocation on each return,” Kinney said. “It’s much more expensive and cumbersome.”

With the tax filing deadline approaching on Wednesday, states that don’t recognize same-sex marriages are dealing with these issues in different ways. Five states require same-sex couples to fill out multiple federal tax returns, sometimes called dummy returns, so they can come up with the appropriate numbers for their state returns. This is how it works in Georgia, Kentucky, Louisiana, Michigan and Nebraska.

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First, a same-sex couple fills out a joint federal income tax return, just like any other married couple. This is the return they file with the IRS.

Next, each spouse fills out a separate federal return as if the filer was single. Information from these returns is used to fill out state income tax returns, which are filed as if each was single.

“You have to literally make out five returns and file three,” said Scott Squillace, a tax lawyer who wrote a legal guide for gay and lesbian couples called, “Whether To Wed.”

“It’s dizzying.”

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