There are many available ways to lower the amount of income taxes an individual owes including filing status, deductions, dependents and credits. The filing status resulting in the lowest amount of taxes owed is “Married Filing Jointly.” According to a recent CNN report, this filing status can save approximately $6,000 per year. The taxpayers must be married in order to take advantage of the “married filing jointly” filing status. However, this option is not available to same-sex couples.
Because of federal and state laws preventing same-sex couples from marrying or recognizing legal marriages performed elsewhere, same-sex couples cannot receive the same tax benefits dual-sex married couples enjoy. Even though many states grant partial or full marriage rights to same-sex couples, the federal government is prohibited from granting any rights to same-sex couples in accordance with the Defense of Marriage Act enacted in 1996.
This can create different tax treatment for state and federal income taxes. The states that permit marriage rights to same-sex couples allow these couples to file jointly at the state level, but they must file separately as single taxpayers for federal returns.
One spouse may claim the “head of household” status. This filing status exposes more income to a higher tax bracket, which means the couple is paying more than under the “married filing jointly” status, especially if the other spouse is not earning an income. Also, many credits phase out earlier for those with individual status as opposed to filling jointly.
In addition to paying higher taxes, same-sex couples also may need to pay higher tax preparation expenses for professional assistance in preparing multiple, and sometimes complicated, tax returns. A couple who has rights at the state level but not at the federal level must fill out additional returns to achieve the correct returns based on the laws of their state and the federal government.
It is not a good idea for a same-sex couple to choose to file “married filing jointly” on their federal income tax return. Such action may result in additional taxes, penalties, and interest, including those related to knowingly filing an incorrect tax return.