The Tax Status of Married Same-Sex Couples in Minnesota is Still up in the Air

Published On: 5th August 2013

From the internet

Gay marriage is set to become legal in Minnesota on August 1st, but couples will have to wait a while longer to know what their filing status will be when they file their income taxes.

While income tax season is still over five months away, there are many wondering about what their status is going to be after they tie the knot. Some wonder why their income tax calculations cannot be the same as heterosexual married couples. This is something they have not received any answers on.

The reason why there has not been an answer is because the Department of Revenue is awaiting word from the IRS on how same-sex married couples should calculate their federal taxes. How they calculate their taxes will have an impact on state tax obligations as well.

In June, the U.S. Supreme Court deemed a portion of the federal Defense of Marriage Act as invalid. This ruling means that gay couples that are legally married can take advantage of federal benefits, including the right to jointly file their taxes.

The IRS says that there is now an increase in gay marriage tax issues after the Supreme Court’s decision. While many have celebrated, the IRS is wading in their complicated tax code so they can give Minnesota an answer.

Part of the confusion actually has to do with the fact that there are only 13 states in which gay marriage is legal. The IRS isn’t quite yet sure whether the Supreme Court decision means that gay marriages in those 13 states will be recognized for tax reasons. There is also the question of civil unions that has come about.

In the past, the IRS has relied on the states’ definition of marriage, but President Obama wants the word “spouse” to be based on a person’s personal beliefs, which would mean all 50 states would require a gay marriage tax.

The question is what type of higher taxes will married gay couples have to pay?

The current tax code has married couples suffering a penalty because the combined incomes put the couple in a higher tax bracket. Previously, gay couples filed separately and claim the credits that are available to single people.

There is also a possibility that the IRS could require married gay couples to pay back taxes for up to three years. There is no doubt that the decisions will be controversial. Most believe that the IRS would allow refunds rather than mandating an additional tax to be paid.