Missouri doesn’t recognize same-sex marriage, but the governor there has allowed those couples to file state taxes as married couples. Other states that don’t allow same-sex marriage have issued other workarounds. But in Alabama, there’s a standoff between federal and state courts, with the state courts refusing to recognize same-sex marriage, leaving accountants at tax time flustered.
It also leaves taxpayers in the awkward position of deciding which state law to violate in filling out their tax returns.
“So one state law says we don’t recognize same-sex marriage, so you can’t file jointly. And another state law says if you file jointly federally, you have to file jointly at the state level,” says Joseph Henchman, who oversees legal and state projects at the Tax Foundation.
All 22 states that had this issue last year have since issued guidance—except Alabama. “Alabama actually removed the guidance from its website,” Henchman says.
In the meantime, what are gay couples to do? They could leave it to someone like Randall Hancock, an accountant in Birmingham. He recently did a same-sex couple’s taxes. “It wasn’t a pleasant experience, I must say,” he says.
For one thing, because the state returns were single and the federal was joint, the state returns had to be done by hand, and mailed in to the IRS. Plus, he had to get a special software add-on to split the returns and crunch the numbers right.
“In this particular instance I had to do one federal joint return, and then two hypothetical federal returns, to create the true and accurate state returns for single filing status,” Hancock says.
In the end, Hancock says, his tax prep fee was more than double his normal fee.
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