Know Your Rights: DOMA and Tax Season

Suzanne Artis on one of the many ways DOMA hurts her family at tax time:
"I don’t like to have to divide [my children] up. They’re not property, they’re my family."

by Bruce Bell, Legal InfoLine Manager

Like most of us right now, you are probably working on, or thinking about, filing your federal and state income tax returns.  For married same-sex couples, the Federal Defense of Marriage Act (DOMA) makes tax time extra stressful - as the New York Times pointed out yesterday. Because of DOMA, the federal government – and some states - will not allow you to file your taxes as the married couple or family that you are.

GLAD has led the fight to knock out DOMA through litigation and public education since same-sex couples first began marrying in 2004. Currently, we are orchestrating the critical friend-of-the-court briefing strategy in the DOMA challenge being heard by the Supreme Court this session, Windsor v. United States.  We anticipate that the Supreme Court will rule on DOMA’s constitutionality by the end of June. If DOMA is ruled unconstitutional, most of the federal discrimination married same-sex couples experience should end. 

See the end of this post for information on how you may be able to preserve a claim to a refund of federal taxes you over paid due to DOMA, if and when the law is finally declared unconstitutional.

But first, since we are still living with DOMA for now, we have put together a summary of how to file your state and federal taxes, with links to our more comprehensive resources.

DOMA makes an already taxing day even more taxing

Melba Abreu and Beatrice Hernandez are hurt by DOMA at tax time

It’s Tax Day in America, which is “among the most stressful days of the year for procrastinators across the country,” as this article from the Christian Science Monitor appropriately notes. It also details a list of Tax Day food freebies being offered to all of the stress eaters out there, because free Arby’s and a couple of Cinnabon Bites will surely make things easier on your wallet, if not your waistline.

Seriously though, there’s probably no other day in which the Defense of Marriage Act (DOMA) hits home harder for the average married same-sex couple, because the law prohibits those couples from filing their federal taxes jointly. This creates extra headaches in the form of additional paperwork that must be completed to account for the differences in state returns -- wherein couples can file jointly -- and federal returns. There’s also the prospect of being penalized for lying on a federal return -- because DOMA forces a spouse to check the “unmarried” box on their return. Couples with kids must decide which parent will claim the children on their federal tax return, an awkward prospect for some because it creates a paper trail that doesn’t reflect the reality of the family. As Suzanne Artis, a plaintiff with her wife Geraldine in our Pedersen DOMA lawsuit, says of having to choose who will claim parentage of their children at tax time, “I don’t like having to divide them up. They’re not property, they’re my family.”

The Artises story is detailed in a new report from our friends at the Movement Advancement Project (MAP), an LGBT think tank, called “Unequal Taxation and Undue Burdens for LGBT Families.” The report documents the numerous disadvantages married same-sex couples face because DOMA does not treat their marriages the same as other marriages under federal tax law. The bottom line is that same-sex married couples wind up paying thousands more in taxes than opposite sex couples as a result of DOMA. The Artis family, for instance, paid an extra $1490 to the federal government on their taxes in 2009, the year they married. Three years later, the extra taxes continue to accumulate. As the parents of three boys, that’s money they could use to pay household expenses or put into college funds.

Then there are folks like Melba Abreu and Beatrice Hernandez, who have paid a whopping $25,359 (and counting) in extra taxes over the life of their marriage thanks to DOMA. In these uncertain times, that’s money Beatrice and Melba, who are both in their fifties, could be setting aside for their retirement years. That’s more cause for heartburn than any Arby’s Bacon Beef 'n Cheddar could ever inflict.

Pass the Pepto.

Ask the InfoLine: Tax Time, Married Same-Sex Couples & DOMA

It’s tax time, and for married same-sex couples the federal Defense of Marriage Act (DOMA) can cause a number of problems. The first involves just filing your taxes. Because the federal government does not respect your marriage, you must file two separate returns using “Single” as your filing status. We encourage couples to in some way indicate on their return that they are in fact in a same-sex marriage so that there is no question about their relationship status if the tax return is used for some other purpose, like applying for a mortgage.

If you live in a place that recognizes your marriage, then in most cases (you should verify this for your place of residence) you MUST file as married, either as married filing jointly or married filing separately (which is different from the “Single” filing status). However, since state tax forms require that you bring over information from your federal form, you will need to create a “dummy” federal tax form as married that you use to bring over your figures onto the state form. The “dummy” federal form never gets filed anywhere—it is just used to create your married state form. For more detailed information about this see GLAD’s publication, Navigating Income Taxes for Married Same-Sex Couples.

The second issue that some married same-sex couples face, is that IF they could file as married they would pay less federal taxes than the current requirement of filing two “Single” returns. When GLAD wins one of its DOMA lawsuits, same-sex married couples should be able to file as married from that point on, but is there anything that can be done to get back some of the taxes that have already been paid out? Possibly.

Generally speaking, the IRS allows you to file an amended return up to three years from the date you filed your return. So if that time period has not expired, you can go back and file an amended return as married. Of course, that return should be denied because of DOMA, but you can keep appealing the IRS decision administratively until they will finally give you a “right to sue” letter in federal court. The idea is to keep your appeal going for as long as possible hoping that we will defeat DOMA while your appeal is still active. So you would want to stretch out each time limit as much as possible but still make sure that you take that step within the allowable timeframe. There is much more detailed information about this in our publication, Tax Time and Preserving Your Federal Rights.

If you have questions about any of this, the best place to go is GLAD’s Legal InfoLine at 800-455-GLAD (4523) or www.glad.org/rights/infoline-contact.

It’s Tax Time: Good News/Bad News

I was on vacation for a couple of weeks, and so although I intended to send in my blog post from Puerto Vallarta, it just didn’t happen—somehow beach won out over blog. But I’m back, and now that we are in the middle of tax season, I thought it would be good to provide you with some tax-related information.

First, the bad news. Although GLAD has two lawsuits going to take down the Defense of Marriage Act (DOMA), until those cases conclude DOMA is still in force, and so that means that if you are a married same-sex couple you MUST each file a federal income tax return listing your status as single (unless one of you qualifies as a legal dependent under the IRS code). However, if you live in Massachusetts, Connecticut or Vermont, you MUST file your state tax as married (either married filing jointly or separately). If you live in another state that recognizes your marriage, check with our sister organization, Lambda Legal, about how to file your state taxes. GLAD has a publication that provides additional information on this topic.

Secondly, if because of DOMA you have been paying significantly more in federal taxes than you would have if you had been able to file as married, you may want to file an amended return as married now for the 2007 tax year, because for most people April 15, 2011 is the deadline for filing an amended return for the 2007 tax year. By filing an amended return as married, and then being rejected because of DOMA, you will be given a two year window to sue. This might buy you enough time for us to win our DOMA suit. You should consult with a tax professional before doing this, because filing an amended return could also increase your chance of being audited.

This tax burden is one of the many ways that DOMA continues to harm married same-sex couples. You can read some of the stories of families dealing with this issue on our website. And we encourage you to share your own story with us.

Finally, some important good news for transgender persons who have paid for medical treatment. You may now be able to claim those expenses as a medical deduction on your federal income tax. Thanks to GLAD’s victory in the O’Donnabhain case, treatment for gender identity disorder (GID) is now on the list of conditions that are eligible for consideration for a medical deduction on the federal income tax. As for any medical deduction, you need to have medical documentation that the treatment you received was appropriate for your particular diagnosis. For more details see our publication.

If you have questions about the above or any LGBT/HIV legal matter, contact GLAD’s Legal InfoLine at 800-455-GLAD (4523).