For gay couples, downside of marriage is snarled taxes

Associated Press

April 21, 2014

Even wedded bliss canít dull the sting of tax season.

When the state wonít recognize your marriage, thereís nothing easy about a Form 1040.

Johannah DeSchepper and Paula Talley have been a couple for 10 years. When the U.S. Supreme Court last summer struck down the federal ban on same-sex marriage, they went to Iowa for a state-sanctioned marriage.

The high courtís decision carried tax implications for them. For the first time in history, legally married same-sex couples could file their federal taxes jointly.

It was a cause for celebration, DeSchepper said. After that, things got messy.

The pair live in Missouri and work in Kansas, two states that donít legally sanction same-sex marriages. That forced them to navigate tax season with hassles and expenses they had never experienced.

Guy Crouch, the owner of Strategic Accounting Solutions, said such couples face the prospect of ultimately filling out at least five returns ó two separate state returns, one joint federal return and two separate federal returns. The last two will never get filed, but they form the basis of individual state returns.

"You have to not only have the money to pay a professional to do this for you, but you have to track down a professional who knows how to do it," Crouch said. "Itís not an easy process."

Crouch said he expects many couples will simply lie and file as individuals because they either canít afford an accountant or find one to work with.

"The tax code is supposed to be applied equally to everyone," he said. "Thatís not happening now."

The process is much simpler in Missouri, despite the stateís constitutional ban on same-sex marriage.

Last year, Gov. Jay Nixon issued an executive order allowing legally married same-sex couples to file joint state tax returns even though the state doesnít recognize their relationships. Some legislators have replied with a long-shot effort to impeach Nixon.

Nixonís action relieved part of the stress for DeSchapper and Talley, but because they work in Kansas, they still had to file in that state.

"I tried to use TurboTax, like Iíve done in the past, but it got incredibly complicated," DeSchepper said. "I even called TurboTax for help, and the person I spoke with suggested I consult with a tax professional."

It ultimately took an accountant two weeks to prepare their taxes, DeSchepper said. The couple filed jointly for federal and Missouri taxes, but each had to each file as single in Kansas.

"There were just so many hoops we had to jump through," DeSchepper said.

Vanessa Lamoreaux and Kendra Tinsley live in Topeka, Kan., with their son and were married in August 2012 in Massachusetts. They knew their taxes would be complicated and were nervous about getting audited. So they decided to rely on a CPA this year.

"We spent a few weeks trying to find an accountant who could help us," Tinsley said. "The nearest one we could find that was recommended to us was in Kansas City. We both work during the day, and we have a child, so that just wouldnít work."

They eventually got a recommendation from a friend for an accountant who agreed to take on the job ó the first couple in this situation that he had worked with.

"Not only were we dealing with the unknown ourselves, but our accountant was dealing with unknowns as well," Tinsley said.

Lamoreaux said she expects the entire process could end up costing "maybe as much as $400."

The patchwork of laws is "a wonderful payday for tax accountants and lawyers, but incredibly difficult and frustrating for legally married couples who just want to file their taxes," said Marc Solomon, national campaign director for the advocacy group Freedom to Marry.

In some cases, couples will benefit from filing jointly at the state level, Crouch said. But not always.

If they own stock investments and have a capital loss, for example, filing separately may result in paying less in state taxes, Crouch said.

"It depends on the nature of the items on the tax returns," he said.

Missouri in 2004 became the first state to enact a constitutional amendment prohibiting same-sex marriage after the Massachusetts Supreme Court permitted gay marriage in that state. Missourians approved the ban with 70 percent of the vote.

A group representing the Missouri Baptist Convention Christian Life Commission and the Missouri Family Policy Council filed a lawsuit last year challenging Nixonís executive order on the grounds that it violates that constitutional amendment.

Earlier this month, the group argued in front of Cole County Judge Jon Beetem for a temporary restraining order to prohibit Missouri from accepting joint state tax returns by married same-sex couples living in Missouri. It took less than a day for the judge to deny the restraining order.

Nixonís executive order also inspired state Rep. Nick Marshall, a Republican, to file articles of impeachment against Nixon, a Democrat. Stanley Cox, a Republican and the chairman of the Missouri House Judiciary Committee, said he expects to hold a hearing on impeachment before the legislative session ends in May.

Despite the hassles and the headaches surrounding their taxes this year, Lamoreaux says it represents progress toward equality for same-sex couples.

"This does open a dialogue, and it makes people sit back and think about what the real implications are of treating people differently," she said. "Any opportunity to further discussion and bring people together around common issues ó like parenting, taxes, down to who makes dinner at night ó those are all mundane conversations, but they are important conversations."