Tax blogs, including mine, have been alive with talk of the federal tax implications of last week’s DOMA ruling. But what about at the state level? What changes on Iowa taxes for couples in same-sex marriages in Iowa?
The answer is: very little changes on Iowa taxes.
Shortly after same-sex marriage became legal in Iowa back in 2009, the Iowa Department of Revenue issued a statement saying same-sex married couples MUST file as married for Iowa tax purposes. So filing as married on Iowa tax returns has not only been allowed since 2009, but it’s been REQUIRED.
It is unlikely that couples in same-sex marriages will see much change on their Iowa returns as a result of the DOMA ruling. What will change is at the federal level and in a simplification of the overall filing process.
Here’s how same-sex couples had to file taxes when DOMA existed:
- Prepare and file separate federal tax returns using a filing status of single or head of household, and applying tax law as it applies to unmarried people.
- Prepare (but not file) a “mock” federal tax return showing what their federal taxes would have looked like if the federal government had recognized their marriage (generally the filing status would be “married filing jointly”) and applying tax law as it applies to married people.
- Use the mock return to prepare their Iowa return as a married couple.
Now that DOMA doesn’t exist, here’s how they’ll file their taxes:
- Prepare and file their federal and Iowa taxes as a married couple, same as any other married couple.
So life becomes much simpler at tax time. And a couple’s federal tax situation could be dramatically different. But at the state level, couples will continue to file as married, same as they’ve done since 2009.