Gay or straight, love is not always permanent. Couples, married or not, go their separate ways. It may be that you flew to Boston with the love of your life in May of 2004. You got married to celebrate the new available legal marriage status for same sex partners. That was years ago. Your love didn’t last a lifetime and you’ve long gone your separate ways.
The Boston marriage is a distant memory that you remember fondly as a whirlwind of sightseeing, seafood, and romance. But otherwise you never think of it – you’re single now.
You may be living as a single (or as a cope with someone new) but for tax purposes you are still married to the old love of your life unless you’ve somehow managed to get legally divorced.
How Do You File?
Starting with your 2013 tax return, you will have to file using the rules for married taxpayers. Unless there are kids in your home, you’ll file married filing separately. If you’re providing a home for your children or certain other relatives, you may qualify to file as single or head of household.
Until you get legally divorced (which may be more difficult than getting legally married), you’ll have to determine your filing status using the rules for married taxpayers.
The tax side of marriage is new territory for same sex couples. Some highlights that may be news to you:
If you are married as of December 31, you are treated as if you were married all year.
Federal income tax returns use married rules — no matter where you live, including states that don’t recognize marriages between same sex couples.
You can only file as married for years in which you are legally married – it doesn’t matter that you didn’t get married because the marriage wouldn’t have been recognized.
You might be able to get some money back if you were married before 2013.
So, how many couples give any thought to taxes when getting married? Not many! Nothing wrong with that—but it’s not a bad idea to learn a little about what marriage might mean for your taxes. With this in mind, this is the first in a series of blogs exploring how the tax effects of getting or being married.
You may owe money to some employees – and the IRS may owe you even more!
For same-sex married couples, the out of pocket cost for benefits has been as much as 50% higher for the spouse’s coverage because of taxes. The extra cost came into play because the benefits were taxable to the employee.
The IRS now recognizes same-sex for all federal income tax purposes. And the recognition is retroactive for earlier years – if employees were married in those years. The IRS will refund overpayments for up to three years.
It seems simple, but there’s a bit of work involved. The first step for employers is to identify employees who paid tax on a partner’s benefits – but who was married to the partner at the time!
For fringe benefits that were taxed (but that, thanks to Windsor, are now tax-free), there are four parts to getting taxes refunded:
By December 31, 2013 (yep – December 31 2013!) employers must refund the employee the employee’s portion of social security and Medicare tax.
The employer must prepare and files amended Forms W-2 and W-3 removing the benefits from taxable income
The employer applies for a refund of both the employee and employer portions of social security and Medicare taxes from the IRS. The IRS has provided special procedures for claiming these refunds.
The employee must amend federal and state tax returns (using the corrected W-2s from the employer) to get a refund of income taxes that have been overpaid.
Fraud, identity theft, expired tax savings, the fiscal cliff.
Add them all up and we’re in for a challenging tax season. Here’s what you can expect.
The first day for efiling your 2012 return is January 22, 2013. How does this compare to other years?
Before 2012, efiling for individual returns usually started the second Friday in January. In 2012, the IRS delayed the efiling start until January 17 (the third Tuesday in January) and for 2013 the start is yet another week later.
Returns filed the first week of efiling often take a few extra days of processing, so the earliest refunds probably won’t show up until nearly mid-February. While you could get a jump start on filing by mailing your return in before January 22, refunds on mailed-in returns usually take four weeks to process, rather than the two to three weeks for efiled returns.
REFUNDS MAY BE SLOWER
Fraud and identity theft are a growing problem for the IRS. New screening and matching processes at the IRS will slow down some refunds. According to an IRS statement, 90 percent of refunds were issued in 21 days or less last year and they expect the same results this year.
What the IRS didn’t say is that most direct deposit refunds were made in fewer than 14 days in the past and efiled returns with refund checks mailed were received by taxpayers in about three weeks. So we expect slower refunds.
How slow? Hard to tell. In previous years the IRS issued a chart that indicated the date to expect a refund based on the date the return was accepted at the IRS. That chart has been discontinued.
And adding to the uncertainty, the popular Where’s My Refund? feature at irs.gov won’t give an expected refund date until several days after the IRS receives the tax return.
SOME FORMS MAY BE DELAYED
Blame the fiscal cliff. Several tax laws expired on December 31, 2011. They haven’t been renewed. But they may still be resurrected if Congress reinstates them (or some modification of them) retroactively.
Oddly enough, this isn’t news – it seems to happen nearly every year – especially with regard to the alternative minimum tax (AMT). The IRS is left in a no-man’s-land to decide how to write forms, instructions, and software programming.
And if they guessed wrong, they have to redo their work.
So, the date you can file your tax return depends on how accurately the IRS guessed about what the 2012 tax laws will be by the time retroactive changes are passed. If you need a form that’s not available because of tax law changes, it may be March before you can file.
One thing is for certain – the 2013 tax return season will be anything but boring!
Ask taxpayers without children whether they support anyone, and the most common response?
“Does my dog count?”
The short answer is “no.” The technical answer is “no.” (That’s because you can’t legally claim your dog as a dependent. Ever.)
But, as with most tax questions, the real answer is, “it depends.” Many of us lavish our pets with high-quality food, too many toys, regular grooming, and lots of treats. Not to mention the cost of routine veterinary care and the occasional visit to the emergency vet. It all adds up to lots of (nondeductible) dollars.
Quick – what are the situations that turn those nondeductible dollars into tax deductions?
1 – Service and Assistance Dogs
Expenses for service and assistance dogs are deductible medical expenses. These dogs are performing tasks that mitigates the effect of a disability. Just because you feel calmer when you pet Sir Barks A Lot doesn’t put him into the service dog category. Guide dogs for the blind are the best-known service dogs. Other dogs (and some other animals) are trained for a range of assistance skills, mitigating the effects of disabilities, including blindness, mobility impairment, autism and post-traumatic stress disorder.
The costs of training, purchasing, and maintaining service animals are part of medical expenses each year. Maintenance includes food, grooming, health care, and other supplies.