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Gay, married, and taxed

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Tax season isn't something people usually celebrate, but many married same-sex couples are finding it even more of a grind.

Married couples in New York State can file jointly or as individuals. They shouldn't assume that one is better than the other, so preparers will likely review what the return would look like for both scenarios.

But the problem for same-sex married couples is with the federal return. Even though New York recognizes same-sex marriage, the federal government does not because of the Defense of Marriage Act.

ILLUSTRATION BY MATT DETURCK
  • ILLUSTRATION BY MATT DETURCK

The federal government considers the couple to be individuals. That means that one of the big financial advantages of marriage — filing joint statements with the federal government — is denied to same-sex married couples.

"On the federal return, if you have a couple where one person is not working outside the home, the person cannot be filed as a dependent," says Sheila Cahill, a licensed tax preparer in the Rochester area. Cahill has many LGBT clients and says the federal government fails to recognize that the wife or husband may be staying home to raise children, for example.

Another basic difference has to do with tax rates.

"A lot depends on the incomes between the couple and on the disparity between the incomes," Cahill says. "The first $20,000 of a single person's income is taxed at about 15 percent, but for a married couple it would be roughly the first $35,000."

Cahill says same-sex couples don't always pay more than opposite-sex couples because there are a lot of variables; it depends on the credits and allowances permitted, she says.

But many experts say that same-couple couples are likely to be at a financial disadvantage in several areas including pensions, the gift tax, and the federal estate tax.

Cahill says for simple filings, the commercial software programs are fine and are more up to date with the marriage law in New York. But if the returns have complications, she advises working with a professional tax preparer.

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