Originally Published on forbes.com on August 1st, 2011
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The New York State Department of Taxation and Finance has released guidance on the effect of The Marriage Equality Act. Assuming you like the idea of marriage equality, your response to their guidance will depend on whether you are idealistic or practical. If you are idealistic, it is great news. If you are practical it is not so great. Here is the gist of it:
Same-sex married couples must file New York personal income tax returns as married, even though their marital status is not recognized for federal tax purposes. This means they must file their New York income tax returns using a married filing status (e.g., married filing jointly, married filing separately), even though they may have used a filing status of single or head of household on their federal returns. In addition, to compute their New York tax, they must recompute their federal income tax (e.g., their federal income, deductions, and credits) as if they were married for federal purposes.
Now New York state taxable income is tied to federal income, so my mythical couple Robin and Terry, whom I introduced in my inaugural post on Forbes,will now have to do three federal returns (although they will only file two of them) to be able to do the one New York return, they are required to file. If they have a lot going on somebody will have to run the numbers on five federal returns to be thorough, since they may want to do New York married filing separate. Come tax season there will be wailing and gnashing of teeth, although I doubt it will be quite as aggravating as what California Registered Domestic Partners had to go through.
If Robin and Terry both have complicated lives this could get rather messy as recomputing their tax as married might give them three sets of carryovers to subsequent years. One slightly risky way to avoid this aggravation would be to file a joint federal return. Since DOMA has been declared unconstitutional and the Justice Department has declared it indefensible, there is a reasonable basis for that position.
P.S.
I’ve been watching for this development so I posted it quickly. I just couldn’t come up with a really good title. I consulted with my friend Alan Jacobs. Alan and I reconnected on Facebook last year. Alan was absolutely the coolest person I knew when I was a teenager. He was real skepitcal about me since I wore a military uniform to high school and had very short hair. My second coolest friend vouched for me though. Alan lives in Greenwich Village which is only the tip of the iceberg of his coolness. Anyway he told me that the title should have been:
P.S.
I’ve been watching for this development so I posted it quickly. I just couldn’t come up with a really good title. I consulted with my friend Alan Jacobs. Alan and I reconnected on Facebook last year. Alan was absolutely the coolest person I knew when I was a teenager. He was real skepitcal about me since I wore a military uniform to high school and had very short hair. My second coolest friend vouched for me though. Alan lives in Greenwich Village which is only the tip of the iceberg of his coolness. Anyway he told me that the title should have been:
FLORISTS AND CATERERS ARE HAPPY WITH MARRIAGE EQUALITY. OH YEAH, IT’S ALSO A BOON FOR ACCOUNTANTS
Confirming that Alan has really nailed it, I had a conversation with one of my retired partners. He retired to Manhattan and got bored. So he is back in the game with a New York firm. The prospect of having to run five federal returns for same-sex couples is delighting him. I haven’t heard what The Wandering Tax Pro, who does all his returns by hand, not being willing to rely on the expensive and unreliable software the rest of use, thinks about the prospect.
Confirming that Alan has really nailed it, I had a conversation with one of my retired partners. He retired to Manhattan and got bored. So he is back in the game with a New York firm. The prospect of having to run five federal returns for same-sex couples is delighting him. I haven’t heard what The Wandering Tax Pro, who does all his returns by hand, not being willing to rely on the expensive and unreliable software the rest of use, thinks about the prospect.