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TESS VIGELAND: Tax season means giant headaches for pretty much all of us. But in states where same-sex partners are allowed to file joint tax returns, they still have to file federally as individuals. For gay couples, that means complicated paperwork and added expense. Reporter, Mina Kim, visited a San Francisco couple caught in the tax tangle.
Mina Kim: Lindasusan Ulrich and her wife Emily Drennen have been happily married for six years. At their cottage home in San Francisco, they show me wedding photos and reminisce.
Ulrich: We were getting our picture taken like there was no tomorrow, and–
Drennan: We got married on a Friday the 13th right?
Ulrich: Oh yeah. Actually, it was February 13th.
Ulrich and Drennen met years ago, but in the eyes of the federal government, they’re strangers. Although California allows same-sex couples to file joint tax returns, the federal government doesn’t recognize gay marriages. Under the Defense of Marriage Act, it won’t recognize civil unions or registered domestic partnerships either. That means same-sex couples have to file separate returns to the IRS as if they’re single.
Ulrich: It was, rather a nightmare and took a while to put all the pieces in place.
Ulrich had to figure out how to split up shared accounts to create their individual returns. She also had to split their expenses, like mortgage and insurance. But the hardest part was trying to recombine those figures to do their joint state taxes. Their deductions as individuals didn’t jive with their deductions as a married couple.
Ulrich: For that key piece of information of how to combine two forms, I couldn’t find the answer anywhere.
San Francisco CPA, Chris Kollaja, says that’s because the rules are still unclear.
Chris Kollaja: I highly recommend that people maintain separate bank accounts. That they pay their deductions in the way they would prefer to deduct them. That they avoid co-mingling when they can.
But even with careful tax planning, it’s typical for same-sex couples to end up paying more to file their taxes. Since state forms require data from federal forms, same sex couples have to first prepare a fake, or “dummy” joint federal return. Online programs like Turbo Tax and Tax Cut charge extra for that “dummy” return. And, if there are any complications along the way, often the online programs can’t handle the filings. Kollaja says that means going to a CPA, like him.
Kollaja: We’re finding that the costs of preparing the return is considerable because we’re preparing their returns three times as opposed to twice.
But for Ulrich, the biggest cost is an emotional one. She says it hurts that she and her wife Drennen can’t file their taxes the same way straight couples can.
Ulrich: In all of those hours that I’m spending on the taxes, I’m constantly reminded that I’m a second class citizen. I’m less than.
Ulrich has yet to tackle her taxes this year. But to help her cope, she says Drennen bought her a “do-it-yourself” tax kit she happened to find online.
Ulrich: With a combination of like tax preparation, and a box of tissues, and a bottle of Jack Daniels.
Ulrich says she probably won’t use the certificate for tax preparation included in the kit because their situation is so complex. But, taking a shot of Jack? That, she says, is a lot more likely.
In San Francisco, I’m Mina Kim for Marketplace Money.
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