Same-Sex Married Couples Will be Able to File Joint Federal Tax Returns

Following the recent U.S. Supreme Court decision striking down DOMA as unconstitutional, the U.S. Treasury has determined that all married same-sex couples will be allowed to file joint tax returns regardless of where they currently live.  This clarifies some of the confusion following the Supreme Court’s decision.

The problem is that certain federal laws look to the marital status of the parties at the time of the event based on the state in which the parties reside.  This would create a complex system where whether a couple files joint tax returns would depend both on where they were married and whether the state in which they currently reside would recognize the marriage.  Of course, this could result in switching back and forth between filing statuses as the couple moves to new states.

The new ruling avoids this result and significantly reduces the administrative burden to determine compliance.  As long as the marriage was legal at the time it was entered into, then the couple will use the married status on their tax returns in the future.  This ruling, however, is not without a downside.

For same-sex couples who want to be divorced, but live in a state that does not recognize their marriage, not only would they have to remain married, they will be nearly permanently attached for federal tax purposes.  Unless they meet certain exceptions, they would need to continue to file joint tax returns, despite being separate, or file as married filing separately.  The married filing separately status usually results in a significantly higher tax burden.

The new ruling means little for Illinois residents.  Those in a civil union in Illinois are not considered married.  As such, they still would not be able to file joint federal tax returns.