Married Californians Jeremy Turpen and Randy Brock celebrated last month’s U.S. Supreme Court rulings on gay marriage. Now they face a tax headache.
Living in a state that recognizes gay marriage, they are entitled under the rulings to federal tax breaks enjoyed by other U.S. married couples such as tax-free, employer-provided healthcare for a spouse.
But still unclear is how they are to report the business income Brock gets from Florida, where same-sex marriage is not recognized.
For both the tax-collecting Internal Revenue Service and America’s accountants, the answer is far from simple. “I could talk to three different CPAs and get three different answers,” said Turpen, who lives with Brock in Capitola. “That’s not equality under the law from a financial perspective,” he said.
The high court ruled in June that the federal government must recognize same-sex marriages that are legal in 13 states and the District of Columbia for the purpose of federal taxes, granting them a range of tax benefits for healthcare, retirement plans and a surviving spouse.
But the court also ruled that states can go on setting their own policies on gay marriage.
This raises questions for the IRS about the 114,000 legally married same-sex couples across the country such as Turpen and Brock.
Of those, about 38,000 live in the other states that do not allow or recognize same-sex marriages, according to the Williams Institute, an arm of the University of California at Los Angeles School of Law. How is the IRS to manage that?
Turpen and Brock, who married in California in June 2008 and will be filing their first married federal tax returns for 2013, may not be entitled to federal tax benefits for their out-of-state income.
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