TurboTax / Tax Calculators & Tips / All Tax Guides / General Tax Tips / DOMA: Tax Implications for Same-Sex Couples

DOMA: Tax Implications for Same-Sex Couples

Updated for Tax Year 2014


OVERVIEW

The Defense of Marriage Act of 1996 was struck down by the Supreme Court in 2013 by majority decision. In August 2013, the Internal Revenue Service declared that legally married same-sex couples could refile tax returns jointly. These decisions have numerous effects on same-sex couples' taxes, and in many cases, rules and tax laws are still being defined to accommodate the rulings.


Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

Recognition of same-sex couples

While DOMA was in effect, the federal government, and thus the IRS, did not recognize same-sex marriage, so these couples were ineligible for more than 1,000 federal benefits for which straight couples may qualify. While it seems the DOMA ruling opens these benefits to all, there is still uncertainty regarding how the IRS will ultimately recognize same-sex marriages.

At the time of publication, the IRS looked to country or state law to determine the legality of a same-sex marriage. This means that same-sex couples married and residing in states that do not recognize same-sex marriage remain ineligible for federal benefits afforded married couples. However, if the couple was married in a state where same-sex marriage is legal but resides in a state where it is not, the IRS will recognize the marriage.

Tax filing status for same-sex couples

The DOMA ruling retained a section that allows states to determine the definition of a legal marriage, though this does not extend to domestic partnerships or civil unions, even if the state recognizes these.
States that do not recognize same-sex marriage force same-sex couples to file their federal and state tax returns with two different statuses. Federal returns can be filed using married status, while state returns cannot. Otherwise, conventional filing statuses are used by same-sex married couples. They can file as:

  • Married filing jointly;
  • Married filing separately;
  • Head of household, meeting the conditions that apply to other married couples, regarding living apart and providing more than half the cost of maintaining the principal residence for dependent children.

The "marriage penalty"

The marriage penalty idea comes from comparing tax rates for two single people versus the tax rate if those two people were married. Tax brackets for married people are not double those of singles, so higher brackets kick in sooner when filing jointly. Even when you choose married but filing separately status, thresholds on some personal exemptions and itemized deductions do not return to single filing levels. Same-sex couples filing jointly would now be affected by these situations, but it is one side of the tax picture, based on partners with similar incomes, above the national household average. Tax advantages such as transfers of property between spouses, are now available to same-sex couples, offsetting effects of married couple tax brackets.

Advice for recently married couples

"As long as same-sex couples meet the IRS guidelines as a married couple, their tax situation will be subject to the same federal rules, claims and exemptions as any American married couple," says James Windsor, certified public accountant in Ann Arbor, Mich.

The IRS recommends that newly married couples notify the Social Security Administration, employers, the U.S. Postal Service as well as the IRS itself of any name and address changes resulting from marriage. Update tax withholding by filing a new form W-4 with your employer, so changes in your household income are reflected in payroll deductions.

Even if you chose the standard deduction in the past, it may now be more beneficial to you as a couple to itemize your deductions. When you use TurboTax to prepare your taxes, we can help you choose the best tax filing status and deduction method for your unique situation.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

DAYS left
LAST DAY to file
1 DAY left
to file your taxes by April 15
2014 taxes due today
Start for Free
* Important Offer Details and Disclosures
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Actual prices are determined at the time of print or efile and are subject to change without notice. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal efile of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Prices subject to change without notice.
  • TurboTax Mobile: Actual prices are determined at the time of print or efile and are subject to change without notice. Come back here before you file to confirm that the price has not changed, especially if it's been a while since you downloaded this app.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app features and content. TurboTax mobile app devices supported include Android 4.1 and above, iOS 8 on iPhone 4s and above, and iPad 2.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $34.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • About our TurboTax Product Experts: Customer service and product support (phone or chat) vary by time of year. Phone support not included with Free Edition.
  • About our credentialed tax experts: Live tax advice service is available for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Click here for full terms and conditions. Not available for TurboTax Business customers.
  • Get up to 10% on top of your federal refund: Amazon.com Gift Card offer is for federal refunds only. Limits apply ($2000 per e-card, maximum $10,000 per customer). Offer available only for TurboTax Online (except Federal Free Edition) or CD/download versions sold and shipped, or downloaded directly from Intuit or Amazon. Except as required by law, Amazon.com Gift Cards cannot be canceled, transferred for value or redeemed for cash.

    Amazon.com is not a sponsor of this promotion. Except as required by law, Amazon.com Gift Cards ('GCs') cannot be transferred for value or redeemed for cash. GCs may be used only for purchases of eligible goods at Amazon.com or certain of its affiliated websites. For complete terms and conditions, see www.amazon.com/gc-legal. GCs are issued by ACI Gift Cards, Inc., a Washington corporation. All Amazon ®, ™ & © are IP of Amazon.com or its affiliates. No expiration date or service fees.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2013 TurboTax products.
  • 4.8 out of 5 stars: Average based on customer ratings on TurboTax.com for TurboTax Online and CD/download products tax year 2014, as of January 2015.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • TurboTax CD/Download priority phone support: Priority phone support for TurboTax CD/Download Premier and Home & Business is accessible exclusively via the TurboTax.com Help Center.
  • Benefit Assist: After you file, TurboTax automatically shows you a full list of government benefits you may qualify for, like Food Stamps or reduced phone & utilities. Plus, we help you apply, saving you time and making it easier than ever to get more money! Estimate based on calculation of Benefit Assist users from tax year 2013 and published reports of average benefit and savings amounts from federal and state programs. Actual amounts and qualifications based on your individual situation; some individuals will not qualify. Feature may not be available for all customers.
  • Simplified State Experience: New, simplified state tax preparation available for most filers.
  • Eligibility for $25 cash back for returning Deluxe customers: Customers who have completed their 2013 taxes in TurboTax Deluxe (CD or download), and have completed their 2014 taxes in either TurboTax Premier or TurboTax Home & Business (CD or download), and apply here before 11:59PM PDT April 20, 2015, are eligible for $25 back. 2014 TurboTax Advantage users are ineligible for this offer. Terms and conditions are subject to change without notice.
  • $0 Upgrade Offer: Valid for customers who filed their 2013 taxes with TurboTax Deluxe (CD or download), completed prior year data transfer this year, and encounter an upgrade to either 2014 TurboTax Premier or 2014 TurboTax Home & Business (CD or download). Valid February 6, 2015 through April 20, 2015. TurboTax Advantage users are ineligible for this offer. This offer may not be combined with our $25 cash back offer. Terms and conditions are subject to change without notice.