4 Steps to Prepare Same-Sex Tax Returns in North Carolina (Pre- 10/24/14)

North Carolina Same Sex The United States Supreme Court overturned the Defense of Marriage Act (DOMA) during 2013 making same-sex marriages identical to heterosexual marriages for federal tax purposes.  However, states such as North Carolina are still permitted not to recognize the validity of same-sex marriages creating the need for up to 7 (seven) tax returns to be prepared.  That’s right – 7 different tax returns!  Here are the steps same-sex married couple in North Carolina should follow to prepare their tax returns.

***10/24/14 Update:***  North Carolina now recognizes same-sex marriages. Therefore, all married couples must file using the Married Filing Jointly or Married Filing Separately filing status.

Step 1:  Prepare Federal Tax Returns

Beginning with the 2013 income tax returns, all same-sex married couples must file their federal tax returns using either the Married Filing Jointly or Married Filing Separate filing status.  So which filing status is appropriate?  Unfortunately, there is no “one size fits all answer”.   Couples should prepare their tax returns using both statuses and then use the status that provides for the best tax savings.  Note that this process is no different that the options allowed for heterosexual couples.

This step has the potential of causing 3 different tax returns  to be prepared – one for both spouses filing jointly and one each for each spouse if they file separately.

Step 2:  Prepare “Dummy” Federal Tax Return

Since North Carolina does not recognize the validity of same-sex marriages (even when the marriage was entered into legally in another state) it is necessary to prepare “dummy” tax returns prior to preparing the North Carolina tax returns.  A dummy tax return in this case is a federal tax return prepared using an unmarried filing status (i.e., Single, Head of Household).  A dummy federal tax return is required for each spouse since it is the starting point for the North Carolina tax returns. 

This step will require the preparation of 2 additional tax returns – one dummy federal return for each spouse.  Note that the dummy returns are NOT actually filed.

Step 3:  Prepare North Carolina Tax Returns

Prepare two individual North Carolina tax returns for each spouse using the information from the dummy tax returns prepared in step 2

At this point, up to 7 tax returns have been prepared – 3 from federal returns using a married status, 2 dummy federal returns, and 2 North Carolina returns.

Step 4: Same-Sex Married Couples Additional Refund Analysis

The repeal of DOMA also allows same-sex married couples the opportunity to amend returns for the past three years to claim refunds of income tax.  Additionally, if a spouse was receiving benefits through the other spouse’s employer then a refund of Social Security and Medicare taxes may also be available.

Many individuals will be able to claim refunds; however, not everyone will qualify.  The rules are rather complex in making this determination.  As such, Simply Taxes is offering a FREE analysis to determine the likelihood of receiving additional refund money.  Simply fill out this easy questionnaire to have a trained tax specialist contact you regarding your options.

 

Simply Taxes, LLC is a local year-round tax preparation firm located in Raleigh, North Carolina.  As a convenience, we offer both in-office and remote meeting options to help our clients optimize their taxes.

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers.

 

This entry was posted in Personal Taxes and tagged , , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

Leave a Reply