Tax Considerations for Same-Sex Couples: Married Filing Jointly vs. Separately
Even though same-sex marriages have been nationally recognized since 2015, some couples may still be in a domestic partnership or civil union rather than a marriage. For federal tax purposes, individuals in a civil union, domestic partnership or similar formal legal relationship are not considered married under state law. This prevents them from filing as a married couple at the federal level. If legally married at the state level, married couples should consider their options before choosing to file as Married Filing Jointly vs. Separately.
Key Takeaways
- Same-sex couples can file as a married couple at the federal level since the Supreme Court legalized same-sex marriage nationally in 2015.
- Married couples have the option to file jointly or separately, with joint filers typically receiving more tax benefits.
- If you are in a registered domestic partnership or civil union, you cannot file as a married couple at the federal level but you might be able to file a joint return for your state.
- Tax reform has reduced the likelihood of the “marriage penalty” by making the thresholds for six of the seven tax brackets for joint filers exactly double those you can use if you're Married Filing Separately or an individual filer.
You have a choice
Married couples have several options when it comes to filing taxes. Whether you're Married Filing Jointly vs. Separately, you still file as a married couple, though with different tax rules.
Until recently, you didn't have a choice to file under either status at the federal level as a same-sex couple due to the Defense of Marriage Act. Since the Supreme Court struck down part of this law in 2013 and legalized same-sex marriage nationally in 2015, this no longer applies. If you wed someone of the same sex, you can now file as a married couple.
This article walks through the considerations you face as a same-sex couple when deciding whether to file jointly or separately.
What is the Defense of Marriage Act and does it still matter?
Before 2013, several individual states recognized same-sex marriages, but you didn't have the right to file your federal return status as a married couple if you were in a same-sex marriage. The Defense of Marriage Act, passed in 1996, prevented same-sex couples from enjoying many of the tax benefits provided to married couples in the tax code.
As a result, between 1996 and 2013, same-sex couples who were legally married on the state level could not file jointly on the federal level, and could not access the deductions and other tax benefits available to married taxpayers.
In 2013, the Supreme Court struck down the section of the Defense of Marriage Act that prevented federal recognition of same-sex marriages for federal benefits such as taxes. Since the Supreme Court established the national right to and recognition of same-sex marriages in 2015 with Obergefell v. Hodges, you can now enjoy footing in the tax code as a married same-sex couple no matter which state you live in.
TurboTax Tip:
You might benefit from filing Married Filing Separately if one spouse has a large amount of out-of-pocket medical expenses to claim.
What does it mean to be Married Filing Jointly vs. Separately?
When you wed, you can file a federal return with your spouse instead of by yourself. You can do this either as Married Filing Jointly or Separately. The IRS encourages most couples to file jointly by making several tax breaks available to joint filers.
If you choose to file separately, you'll:
- have half the Standard Deduction amount available to those filing jointly ($14,600 vs. $29,200 in 2024)
- have smaller IRA contribution limits
- lose eligibility for claiming the student loan interest deduction
- lose eligibility for claiming the Earned Income Credit or Lifetime Learning Credit
- have $1,500 available in capital loss deductions instead of the $3,000 you get as a joint filer
By law, if you marry under state rules, then the federal tax code recognizes you as married for tax filing purposes. This remains true even in the event you live in a state that doesn't recognize your marriage. If this occurs, you may file a joint federal tax return and individual state tax returns.
While the Supreme Court ended all state bans on same-sex marriage in 2015, the ruling didn't change registered domestic partnerships, civil unions, or other formal relationship statuses recognized under state law.
If you're in a registered domestic partnership or civil union, you may not file as a married couple at the federal level. Under these formalized legal relationships, you can only file individual returns at the federal level.
If you and your domestic partner have a child who qualifies as a dependent, one of you may file as a Head of Household and claim the child as a dependent. In this scenario, you or your partner, but not both, may claim a dependency deduction for the child under the Head of Household filing status.
Should same-sex couples file joint returns?
The answer to this question is the same for any couple: You may choose to file a joint return if it saves you money. After tying the knot, you'll need to decide whether Married Filing Jointly vs. Married Filing Separately makes sense for your situation.
The tax code does award filing jointly in many circumstances. You can prepare your tax returns easily with TurboTax to identify whether filing jointly will result in a marriage bonus or marriage penalty.
In instances where tax brackets, the Standard Deduction, or other aspects of the tax code don't double for you as Married Filing Jointly, you'll likely encounter a marriage tax penalty. Though, instances of this happening are much less likely than in previous years thanks to recent measures from Congress.
You might consider filing separately as a married couple when you make roughly equivalent levels of income and one spouse has a large amount of out-of-pocket medical expenses to claim. Because the IRS only allows you the ability to deduct these costs that exceed 7.5% of your adjusted gross income, having a lower income threshold as a married couple who files separately might save you more money.
Tax reform went a long way toward reducing the likelihood of a marriage penalty by making the thresholds for six of the seven tax brackets for joint filers exactly double those you can use if you're Married Filing Separately or filing as Single. High-income earners are the only ones likely to encounter this when the top tax rate in 2024 for Single filers starts at $609,350 compared to the same tax rate threshold of $731,200 for Married Filing Jointly filers.
In most cases, joint filers get a marriage bonus when the incomes of both partners are significantly different. This pulls the higher earner's income into a lower tax bracket, generally saving you money.
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