The most-common question people in same-sex marriages have about life after DOMA is if they’ll be better off or worse off by filing as married.
I answer by saying that the answer is: “yes, no, maybe.”
In my practice, approximately 2/3 of my clients in same-gender marriages will owe more in taxes by filing as married than they did by filing as two unmarried people.
This is because of something called the “marriage penalty.”
The marriage penalty is not a literal “penalty” assessed against married couples. The term is used informally to explain the phenomenon in the tax brackets whereby two people pay more in taxes when they get married. This has existed since the late 1960s and historically has hit approximately 50% of married couples.
I wrote more about this topic in this blog post from June 2012.
As I wrote in that blog post regarding how same-sex married couples often benefit on their tax returns from filing as two single people:
In presenting the numbers above, I am not saying that same-sex married couples “have it good” on their taxes. THEY DON’T.
As I have said repeatedly, it’s much better to look at the blatant discrimination that same-sex couples face, rather than looking at numbers on a 1040.
In general, the couples who will benefit from filing as married are those where one spouse earns significantly more than the other spouse; but that’s not always the case — if, for example, the lower-income spouse could claim the earned income credit by filing as single, this couple may find that their combined income is too high to claim the EIC, which could cost them at tax time. Again, it varies widely from couple-to-couple.
Year-to-year on a person’s 1040, the “benefit” of being married may be hard to find for some couples. But there’s much more to why it’s good that DOMA got struck down than just the bottom line on the tax return.