Last summer, Ken Wittenauer and his husband celebrated when the U.S. Supreme Court overturned the Defense of Marriage Act and extended federal recognition to same-sex marriage.
Next spring, the two Charlotteans will pay a price for that victory – literally.
They’ll be among thousands of same-sex couples in North Carolina who will have to prepare multiple tax returns: one for the IRS that now recognizes their marriage and separate “dummy” returns for the state that does not.
“It’s just disappointing that the state that I live in won’t recognize my marriage for purposes of taxation the way the federal government does,” said Wittenauer, a 58-year-old attorney.
Since June’s high court decision, the Internal Revenue Service recognizes lawful marriages of same-sex couples. For the first time, those couples must generally file as married on their federal return.
However, according to the Human Rights Campaign, North Carolina is one of 20 states that not only don’t allow same-sex marriage but also use federal returns as a basis for state returns.
Now, under an October directive from the Department of Revenue, each spouse will have to prepare a “pro forma,” or dummy, federal return to determine their state tax liability.
For years the situation was reversed.
Under DOMA, gay and lesbian couples in states that allowed them to marry would have to file married state returns but separate federal forms.
“It’s something that couples in a lot of states unfortunately are going to to deal with as long as we have this two-tiered system where some states recognize these couples as fully equal and others don’t,” said Brian Moulton, legal director for the Washington, D.C.-based Human Rights Campaign. “The patchwork system we have … is unfair and unworkable.”
When a new Illinois law takes effect in June, 18 states will allow same-sex marriage. Thirty-three states have legal or constitutional bans. North Carolina voters approved a constitutional amendment last year.
The Census Bureau reported that in 2010 there were nearly 132,000 American households with same-sex married couples, and 515,000 with unmarried, same-sex partners.
In North Carolina, there were 3,224 married same-sex couples and 15,000 unmarried couples in 2010, according to an analysis by the Williams Institute of the UCLA School of Law.
Since then about a dozen states have legalized same-sex marriage, making it likely that many more North Carolina couples have gone elsewhere to marry.
Most will find themselves with more work at tax time, if not more costs.
Laura Maschal, who lives in Charlotte with her wife, Lacey Williams, has always done their taxes. But this year she expects to prepare four separate federal returns.
She’ll do one as married filing jointly and one as married filing separately to see which is more advantageous. Then she’ll do two separate dummy federal returns for the state.
“I really did think this is the year I might break down and pay somebody,” says Maschal, 35, an IT project manager who married in Vermont last year. “I expect I’ll be spending about twice the time that I normally do.”
Chris Sgro is the executive director of Equality North Carolina, a statewide advocacy organization for the LGBT community. He says others are in the same boat.
“I talk to couples all over the state who don’t know how to file their taxes this year,” he says. “Financial planners, gay and straight alike, are scrambling to determine how to move through incredibly complicated state taxes, and how gay and lesbian couples are going to have to deal with that when they’re federally recognized.”
Steav Bates-Congdon, a church music director who lives with his husband, William, in Union County, expects to do their taxes with TurboTax software.
“The good news is we probably don’t owe any taxes,” he says. “The bad news is we still have to fill out all the forms.”
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