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April 21, 2014


Same-sex marriage and state income taxes: an update

This is a follow-up to a post we did a couple of months ago on the crazy-quilt world of same-sex income tax issues.

As we noted in our February 26 post, the Supreme Court’s ruling against the federal Defense of Marriage Act was a game changer. It led to a decision by the IRS to require same-sex couples who were married in one of the states where that form of marriage was legal at the end of last year to face the same type of choice that heterosexual couples have long faced.

That choice, of course, is essentially whether to file jointly or separately.

But what about state income taxes for same-sex couples? In this post, we will update you on some of the aspects of that issue.

The bottom line, nationally, is that states are all over the map on income taxes for same-sex couples.

One the one hand, same-sex marriage is still not recognized in 22 states. But even in those states, taxpayers need to refer to their federal tax return when completing their state taxes.

Indeed, in some but not all of those states, same-sex taxpayers have to complete so-called “dummy returns.” In practice, this means that same-sex taxpayers must complete a form showing them filing as a single at the federal level.

In the 12 states that use this “dummy return” method, a same-sex taxpayer must do this even if, in actuality, he or she filed jointly with a same-sex marriage partner at the federal level.

Fortunately, Texas is not one of these “dummy return” states. In fact, as we noted in February, a federal judge has struck down the prohibition on same-sex marriage in Texas.

But there is still plenty of uncertainty about the state income tax implications of it all.

Source: Crain’s Wealth, “Gay couples face tax insanity,” Darla Mercadok, April 16, 2014