Why Gay Couples Hate the IRS
The administration’s first action in mid-July seemed to say that responsibility fell somewhere between the two. The Office of Personnel Management announced the extension of spousal benefits to all married lesbian and gay federal employees, regardless of whether their home state recognizes same-sex marriage. Yet couples in legally equivalent civil unions and domestic partnerships would continue to be denied spousal benefits.
The rest of the federal government now has to play catch up. The Internal Revenue Service is being urged to apply the same standard, recognizing all same-sex marriages equally at the federal level, to all taxpayers. This seems like a simple and fair solution — quite an uncommon description for any part of the U.S. tax code.
Unfortunately, the reality is that it won’t be simple or fair in practice.
Recognizing all same-sex marriages would clear up some tax uncertainties for couples who, like my spouse and I, are married but live in a state that doesn’t recognize their relationship. But this certainly wouldn’t resolve all of our tax issues.
Under this approach, all married same-sex couples would file their federal returns as either married filing jointly or married filing separately. Yet, in states that don’t recognize same-sex marriages, these couples would be prohibited from using that same status when filing their state tax returns. They would have to prepare parallel single or head of household returns for their state income taxes. Thus they would still be faced with all of the existing uncertainty surrounding the tax status of same-sex couples.