Newly married gay couples face tax landmines
By Amy Feldman
NEW YORK | Mon Aug 27, 2012 2:56pm EDT
(Reuters) - While most tax news in this election cycle is focusing on expiring tax cuts, what may be most revolutionary about 2012 is how many newly married same-sex couples are going to face a tax quagmire.
There are more than 130,000 married gay and lesbian couples in the United States, according to U. S. Census Bureau data. And with more states, notably New York, legalizing same-sex marriage, that number is rising.
Taxes for same-sex couples are far more complex than those for heterosexual couples because the 1996 Defense of Marriage Act (DOMA) prohibits same-sex marriages from being recognized at the federal level, while state-level tax rules vary greatly.
FILING STATUS MATTERS
Because of DOMA, you can't file your federal income tax returns jointly, even if you are married by state standards. If you or your partner can file as head of household instead of as single, you'll be able to get a greater standard deduction - $8,700 in 2012, vs. $5,950 for single - and better tax rates.
To qualify, you need to cover more than half the costs of the household's upkeep and have a "qualifying person" living with you - typically a related child. In a lesbian couple where one partner was the biological parent of a child and the other was a breadwinner and not related to the child, neither would qualify.