(Corrects the spelling of Jean Nelsen in paragraphs 12, 13, 15
By Beth Pinsker
NEW YORK, March 5 Same-sex couples have a new
right to celebrate in April, when they can file joint federal
tax returns for the first time.
It might actually make sense for some couples to stay
asunder in the eyes of the Internal Revenue Service, even though
the U.S. Supreme Court struck down the Defense of Marriage Act
in June 2013. Tax experts say only about 5 percent of married
couples file separately because of significant downsides such as
limited itemized deductions and a much higher tax bite, but it
may work out better than filing jointly in specific
"Many couples see the pain, going from two singles to
married," said Terry Durkin, director of the National
Association of Enrolled Agents.
Here's what married couples, regardless of gender, need to
consider as they decide how to file their taxes in 2014:
1. Are your incomes unequal?
If one spouse makes considerably less money than the other,
consider filing separately to keep each in a lower tax bracket.
This is especially true if the lower-earning spouse has high
itemized deductions such as big medical expenses that would not
qualify for a deduction, which starts above 10 percent of the
combined adjusted gross income.
Income disparity is on the minds of Julie Dorley and her
wife Susana as they consider filing separately for the first
time as a married couple. They wed in 2004 in Massachusetts,
which recognizes same-sex unions.
Dorley, an information services worker in Boston, has W-2
income, while her wife owns two freelance businesses that
produce much lower income and require quarterly estimates.
Durkin, her tax adviser, said most tax preparers will run
the numbers both ways and that tax preparation software such as
TurboTax, a unit of Intuit Inc, usually allows
manipulation to compare outcomes.
"I think we'll still file jointly, I feel like I have a
political stake in doing so," Dorley said.
2. Are you both high-earners?
Durkin, who is based in Burlington, Massachusetts, has
another client couple considering filing separately. They both
earn a lot, putting them over the new combined threshold of
$450,000 for paying higher tax rates on things such as capital
The math is so dire in some cases that high-earning same-sex
couples are considering the tax issue as they decide whether to
Jean Nelsen, president of the California Society of Enrolled
Agents, has received at least six calls in the last three months
from same-sex clients seeking her financial opinion on the
"They say, we're leaving it up to you whether we should get
married or not," Nelsen said. She told them: "If this is your
deciding factor, then don't get married. If you don't have
another reason, then it's the wrong place for you."
3. Do you want to separate assets?
In community-property states such as California, Texas,
Arizona and a handful of others, separate filing is required for
keeping assets from commingling.
Nelsen, based in San Francisco, said she usually advises
clients in this position to get a prenuptial or postnuptial
agreement to delineate ownership. She gets about a dozen of
these cases in a year.
Nelsen cautioned, however, that it is not for everyone:
Couples usually decide not to file separately because their
lives are too intermingled.
5. Is anyone hiding anything?
Filing separately means the IRS will not hold a spouse
liable for mistakes or fraud on the other's return.
You may want to go your own way if "you're in a situation
where you aren't confident that your spouse was being aboveboard
and you don't want to get involved in it," suggested J.J.
Montanaro, a financial planning expert with USAA, a financial
services company that caters to customers with military ties.
6. Are you mad at each other?
Divorcing couples who do not have a signed decree before
December 31 of that tax year could consider filing separately
for practical reasons, even if it might be more beneficial
financially to file jointly.
Acrimony also is a warning sign that filing separately may
be in your best interest.
Cynthia Leachmoore, an enrolled agent based in Soquel,
California, said she tells married clients that filing jointly
is an election and if one spouse does not want to, the other
While Leachmoore thinks she files more separate returns than
her colleagues, she doesn't think she'll end up getting a large
number of new same-sex couples going that route this year.
"People are dancing up and down to file jointly," Leachmoore
(Follow us @ReutersMoney or here.
Editing by Lauren Young and Amanda Kwan)