NY1.com

  57º

You are not signed in  |  Sign in here  |  Help

You're viewing a lite version of NY1.com

Time Warner Cable customers: Sign in with your TWC ID for video access.

Get my TWC ID. | Get TWC service. | Read the FAQ.

04/03/2012 12:01 AM

Same-Sex Couples' Right To Marry Brings On Complex Tax Filings

  To view our videos, you need to
enable JavaScript. Learn how.
install Adobe Flash 9 or above. Install now.

Then come back here and refresh the page.

This latest report in NY1's tax series covers how newly married same-sex couples face a new and complicated tax scenario. NY1's Money Matters reporter Tara Lynn Wagner filed the following report.

Last year marked the first time same-sex couples could legally wed in New York, and that means this tax season will find them with a new status: either married filing jointly or married filing separately.

Either way, to the federal government, these newlyweds are still single, and that is where things get complicated.

"Because the New York State tax return takes its numbers from the federal return, so if your filing status is different for the state return from the federal return, which it will be for same sex couples, then you have to do multiple federal returns," says Tina Salandra, a certified public accountant for Numerical.

The multi-step process starts with payers by filling out a faux federal return.

"You'd have to actually compute a federal tax return on a joint basis, for federal purposes, even though you are not going to file it," says Grillo.

Using those numbers, the same-sex couple files the joint tax return with the state, assuming the spouses are married filing jointly. Then it's back to federal forms, this time for real.

"You would then go back and file or prepare two separate single returns, or one of them might be a head of household return, but they are single returns for federal purposes," says Grillo.

The result is these couples may be preparing twice as many returns as last year, and if they are using a tax professional, that could mean twice the price.

"There's sometimes seven tax returns that would be required per couple," says Salandra. "It's going to be more time and more complex and time is money."

Another way matrimony can cost taxpayers is the so-called "marriage penalty." Having two incomes can push the couple into a higher tax bracket and as a result, the couple may pay more in state taxes than they had when they were single.

There are some benefits as well. In the past, if one half of a same-sex couple covered the other partner under a health insurance plan, that person would have to pay taxes on the value of that coverage, which CPA Tina Salandra says could be worth $5,000 or $6,000.

That tax, however does not apply to spouses, which could mean a nice savings, but on state taxes only.

"They still have to pay it on the federal level," says Salandra.

For more information, visit tax.ny.gov.