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IRS recognizes same-sex marriages, regardless of where couples live

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Roberto Rosales/The Albuquerque Journal/AP/File

(Read caption) Couples, from left, Karin Perry and partner Karen Partlow, Russell Garcia and partner Chayne Avery wait to fill out paperwork for their marriage licenses on Tuesday, in Albuquerque, N.M.

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Just two weeks ago, I discussed potential tax issues a same-sex married couple could face if they live in a state that doesn’t recognize their marriage. Yesterday the IRS ruled that, for tax purposes, such couples are married regardless of where they live. That ruling answers the question of what filing status the couple must use but also complicates tax filing for same-sex couples that live in states that prohibit their marriages.

The IRS based its decision on a 1958 ruling that recognized common law marriages established in states that allowed them, even if a couple subsequently moved to a state that did not recognize such unions. Affected couples could continue to file federal tax returns as a married couple, even though their resident states considered them to be single. Notably, yesterday’s ruling also said that the IRS will not consider registered domestic partnerships, civil unions, and other similar formal relationships to be marriages.

The ruling renders half of the table in my earlier post irrelevant (see new table) but leaves in place the table’s most complicated cells. A same-sex married couple that lives in a state that doesn’t recognize their marriage will have to file a married federal return and two individual state returns. In many states, the latter will require them to create two fictitious individual federal returns, because such returns are the basis for filing their state returns. Tax preparation software will surely handle the complication seamlessly but affected couples will still have to make decisions about which spouse claims their various deductions and non-wage income. And pity the couples that complete their tax returns the old fashioned way using pencil, paper, and a calculator. 

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