Multiple tax returns for same-sex couples

Tax Tips

Same-sex couples in states across the country have benefited in recent years from a wave of statewide laws that legally recognize their relationships. But along with the equality and protections afforded by a Registered Domestic Partnership, Civil Union or same-sex marriage comes a complicated tax-filing situation.

Nine states require same-sex couples who have legally joined to file their state tax returns “as married.” However, the federal government does not recognize those relationships. That means same-sex couples in those states must continue to file their federal returns individually, not as a couple—and that’s where it gets interesting.

Three federal tax returns must be prepared: a single federal return for partner one; a single federal return for partner two; and a pro forma, or “dummy,” married federal return to be filed only with the state. That allows the numbers to come out right on the state tax return. If using e-file, each of the single federal returns should be prepared and e-filed prior to the preparation of the dummy federal return.

Massachusetts, Vermont, Iowa, New Hampshire, and Connecticut all provide marriage equality to same-sex couples. California, Oregon, and the District of Columbia have Registered Domestic Partnerships, while New Jersey provides civil unions. Same-sex couples married in California between June 16, 2008 and Nov. 4, 2008—when same-sex marriage was afforded by the courts—also must file “as married.”

As a same-sex couple you may think you have to go to tax pro to handle your unique tax situation. But TurboTax can walk you through it. If you tell TurboTax you live in New Jersey, for example, you’ll get the option of selecting “civil union” as your martial status. The next thing you’ll see is a step-by-step guide to filing your returns followed by a customized interview experience that keeps you on track through the entire filing process.

If you’re a same-sex couple in this situation, we recommend you use the desktop version of TurboTax. That’s because you can prepare and file up to five federal returns and a state return for one low price ($59.95 for the Deluxe version compared to over $200 for going to a pro). The desktop products also allow you to save a return under a new file name so you don’t have to re-enter all the information in your dummy federal return. That’s a lot of time saved.

For most couples, a filing status of “married filing jointly” will get them the best outcome. However, if you need to file “married filing separately,” you can do it in many of those nine states (we recommend you research “community property” states first). That would require you to create two dummy federal returns and two state tax returns, for a total of six.

Tax returns for Registered Domestic Partnership, civil union, or same-sex marriage couples can be e-filed in all nine states that require them to file as married. Remember to select only the state e-file button when filing your joint state return. This will send the dummy federal return with the state, but not to the IRS.

In general, e-filing is the fastest way to get your refund.

Comments (17) Leave your comment

  1. Hi,

    TurboTax has been working hard to provide a solution to registered and married same-sex couples in community property states. However, the preparation of accurate tax returns for couples in this situation relies on the review and analysis of each couple’s individual agreements and related state law, within these new guidelines. Decisions on how to split income and expenses are based on a state’s community property law and the individual legal agreements made between couples at the time of their registered domestic partnership or same-sex marriage. Given this, we can’t provide a fully guided federal experience in TurboTax at this time. Please check out the following support article for more information:

  2. Has the IRS updated its Pub 555 or has Turbo Tax put together this worksheet yet for same sex couples in CA, WA and NV? Its March 11.

  3. Like Wayne said, this really needs to be updated now that the IRS has deferred to state rules on community property for Registered Domestic Partners and same-sex couples who are married.

  4. Note, when using each person’s prior year’s form as the starting point for this year’s Federal form, you have to manually override things like 2008 payment paid with an extension or 2008 refund applied to 2009 taxes. These have an impact on the Federal tax calculation. I didn’t realize this until I started the State forms. Also, if you earn income in a state that does not recognize a same-sex marriage (I earn income in VA, but live in MA), you have to manually adjust the first state’s (VA) form to be the same as the individual form, before computing the second state’s (MA) tax.

    It’s really too bad there’s no merge… I do understand that it would be really complicated to ensure it would work.

  5. You should have received a Form 1099-G from the state for the state refund. The amount you actually received from the state is the amount you’ll need to report on this year’s federal returns. If you are in California, you are in a “community property” state. That means you could divide the refund in half and report equal portions on your two single fed returns this year.

  6. I have another question.

    Last year I received a state refund after filing married and jointly with the state and single with the feds. This year turbo tax assumes I filed as single with the state and received a higher refund than I actually did. Now I can edit this item but not sure how to treat it.

    I think there are three solutions to the problem:

    1) Do I enter the actual refund from CA as a joint filer?

    2) Do I enter the refund I would have gotten if I filed single at the state level?

    3) Do I enter a pro-rated refund amount? Assuming the pro-rate comes as a percentage of income produced jointly (ie if I earned 90% of the income then I enter 90% of the real refund).

    Solution #3 seems to best model the situation but solution #2 will probably keep me out of IRS trouble.

    Please advise. thanks!

  7. Nothing has changed since last year. As long as you are using a desktop version of TurboTax (from CD or download) you can open your federal return and save it under a new file name. That will now become the “dummy” joint federal return you will file only with the sate return. On the Personal Info summary, select “Edit” next to your info. Change your marital status from “single” to “same-sex marriage,” “RDP” or civil union, depending on the state where you live. TurboTax will then ask you to enter your spouse’s info. When you get to the income section, you will enter your spouse’s income info, and so on. When you get to the State Taxes section, TurboTax will transfer all your joint info to your state return. Remember, these returns will only need to be filed with the state, so when you get to the e-file section be sure to only select “e-file state.” That will send both the dummy federal return and the state return to your state, but not the IRS.

  8. I’m still confused and TurboTax makes it more confusing this year than last year. I’ve created two files so far: 1 individual Fedaral for my partner who is retired, 1 individual Federal for myself who is full time employed. I’ve skipped state returns on both files and saved and printed the federal files. Now what?

    Do I start a third file/return to file jointly for state and within that file file married on the federal or do I open one of our saved individual files and edit the information? I tried doing this and it’s not easy to see where I need to make changes.

  9. It’s time for Turbo Tax to fix its online version so that couples in this situation can still use the online version without paying higher costs.

  10. Thanks TurboTaxJohn. Can you explain to me why turbo tax does not let you merge yet? there are more and more of us with this problem and honestly the re-entering data part really stinks. Would love it if you could provide some help on this one…

  11. You will have to re-enter your partner’s data into the “pro forma” federal return. Unfortunately, TurboTax (nor any other tax software) cannot yet merge two tax files into one.

  12. So, step-by-step, how should this be done?

    1. Prepare taxes as “single”

    2. E-file Federal Taxes

    3. Resave each file under a new name

    4. Change the marital status to “Married filing jointly”

    5. E-file State Taxes

    I’ve never filed as married before. Do I have to merge information from one person’s tax return into the other’s file? Or is it still in two separate files?

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