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Tax Filing Tips for Same-Sex Couples

By Your Money Matters FOXBusiness

“This is not a complicated case.”

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Not exactly the opening sentence you expect to hear from a federal judge. But after you read the 16-page decision by Judge Timothy S. Black of the U.S. District Court for the Southern district of Ohio, it’s hard not to agree with him.

The case Black presided over, Obergefell, et al v. Kasich, et al, was decided less than a month after the U.S. Supreme Court handed down its landmark decision in the Windsor case that ruled the federal definition of “marriage” unconstitutional. The high court’s decision opened the door for gay and lesbian couples to be entitled to the same rights that heterosexual couples enjoy.

The case involved Cincinnati residents James Obergefell and John Arthur who had lived together in a committed and intimate relationship for more than 20 years. Unfortunately, John was on the verge of dying from Amyotrophic lateral sclerosis (ALS). It was important to both men that his death certificate indicate that he was “married” and not “single” at the time of his death.

Since Ohio does not recognize same-sex marriage, the two flew to Maryland in a private plane accompanied by medical personnel. The couple was married on the tarmac in Anne Arundel County and immediately flew back to Cincinnati. The lawsuit was filed to ensure that Ohio officials listed John as “married” when he passed away.

As Judge Black pointed out in his ruling, “Throughout Ohio’s history, Ohio law has been clear: a marriage solemnized outside of Ohio is valid in Ohio if it is valid where solemnized.”  For instance, even though Ohio law forbids marriages between first cousins or between minors, it recognizes such marriages if they have occurred in states that allow such unions.

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“How then can Ohio…single out same sex marriages as ones it will not recognized,? asked Judge Black. “The short answer is that it cannot.” He ordered state officials to enter “married” on John’s death certificate and to list James as his “surviving spouse.”

In the words of tax attorney Michelle Ward of Keebler and Associates, this case as well as the decision in O’Connors v. Tobits, are “just the tip of the iceberg” in terms of an onslaught of state-level cases that have been filed since the Windsor decision was handed down.

As in the case of Obergefell vs. Kasich, most of the cases involve mundane, everyday issues that heterosexual couples take for granted. For example, in Michigan, where voters overwhelmingly approved a ban on gay marriage, April DeBoer and Jayne Rowse, two women who have been living together as a couple for seven years, want to adopt each other’s children.

According to Ward, they are unable to do so “because Michigan law states that only single individuals or married couples can adopt.”

DeBoer and Rowse sued Michigan’s governor and attorney general, claiming the state’s adoption code violates the Equal Protection Clause of the 14th Amendment to the U.S. Constitution. State officials tried to get the case thrown out, but on July 1, Judge Bernard A. Friedman of the U.S. District Court Eastern Michigan decided that the women’s “claim has sufficient merit to proceed.”

Freidman quoted the Windsor decision, stating that “of particular importance to this case, the justices expressed concern that [the government’s definition of marriage would]… ‘impair the rights of ‘tens of thousands of children now being raised by same-sex couples.’”

In Pennsylvania, another state that does not recognize same-sex marriage, the Department of Health has filed suit to stop a county clerk from issuing marriage licenses to same-sex couples.  More than 100 have been issued since the Windsor decision.

“These are the complications we’re going to get because there’s no uniformity across the United States right now,” says Nanette Lee Miller, a CPA who heads up the Lesbian, Gay, Bisexual and Transgender division at Marcum, a tax and estate planning firm. Until there is clarification on a national level, these cases will continue to be decided on a state-by-state basis.

Marriage isn’t the only issue. “What if a couple is trying to get a divorce in a state that doesn’t recognize same-sex divorce?” asks Miller.

She is more confident that things will get sorted out relatively quickly at the federal level, if for no other reason than the IRS needing an answer by the end of the year. “People have to know how to file their tax returns, says Miller. “Whether you are married or not depends upon the state you live in.  States don’t have to marry you, but they can’t invalidate.”

She stresses that couples living in a state that recognizes same-sex marriage and they are legally married shouldn’t worry about any tax-filing complications. She recommends filing a joint return for state and federal purposes.

But what should you do if you don’t live in one of the 12 states or Washington, D.C., that recognize same-sex marriage? 

At least in terms of federal taxes, Miller urges same-sex couples to “file a protective claim” so that they don’t lose the opportunity to amend their returns for 2010, 2011 and 2012. That’s because there’s a three-year limit on amending your tax return.

If you wait until 2014, you will lose the opportunity to amend your 2010 return. “If you can save money by filing an amended return [as a couple] you don’t want that statute of limitations to expire.”

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