Couples in same-sex marriages can’t file their federal taxes as “married.” But if a same-sex married couple lives in a community property state, they must apply community property laws on their federal tax returns.
What is community property law?
Nine states follow community property law. The 40,000-foot definition of community property for tax purposes is that each spouse is entitled to 1/2 of the other spouse’s income and deductions. These states follow community property law:
- New Mexico
When married couples in these states file separate tax returns, they must apply community property law. So each spouse must claim 1/2 of their own income and deductions and 1/2 of their spouse’s income and deductions.
Of the states shown above, California, Nevada and Washington recognize same-sex unions in the form of “registered domestic partnerships” (there are also some same-sex married couples in California, because California allowed same-sex marriage for a few months in 2008).
While couples in these 3 states can’t file as married on their federal returns, they MUST apply community property laws on their federal tax returns.
How Does it Work?
Here’s an example:
Mike and Ike are in a same-sex domestic partnership in California. Mike has income of $60,000 and Ike has income of $40,000. They cannot file their federal tax returns as married, but they must apply community property laws on their federal tax returns. Mike will file a tax return as either single or head of household, and will show $50,000 of income on that return (1/2 of his income and 1/2 of Ike’s income). Ike will do the same thing.
Is this Required or is it Optional?
The short answer is, per the IRS, it’s required.
“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”