Question of the Week: Must a newlywed same-sex couple file as married filing jointly or separately, even if they would like to use single or head of household filing statuses?

Must a newlywed same sex couple file as married filing jointly or married filing separately, or can they file as head of household and single in 2020 as they did prior to their wedding?

April 19, 2021

Q: Can a same-sex couple who legally married at the end of 2020 continue to file as head of household and single as they did in previous years?

New clients Andrea and Beth are a same-sex couple who married in our state last December. They lived together since the start of the pandemic earlier in 2020. In 2018 and 2019 Andrea filed as single. Her income was about $90,000 both years, so she received only a partial stimulus payment for the first round and nothing for the second round. Beth filed as head of household in 2018 and 2019. She has one son, now age 10, who lives with the couple. She also takes some graduate school classes. Her income both years was about $30,000. She claimed the lifetime learning credit, the child tax credit (mostly the ACTC), and the EITC. She received full stimulus payments for herself and her son.

Andrea’s and Beth’s income will be about the same in 2020. Beth didn’t really think about what her tax situation would be as a married filer when they decided to get married last year. The CTC will be the same, but she will have a reduced education credit and lose EITC altogether. Andrea will have a better tax outcome than she would have as a single filer but their combined taxes if they filed as they have previously (head of household return plus single return) would still be slightly better overall than their MFJ taxes. Andrea is willing for Beth to continue filing as head of household and get a large refund with EITC, even if it means she’d lose her own advantage as a joint filer. They are also wondering if it makes any difference that they didn’t marry until the last month of the year.

Does Beth have the option to continue filing as head of household? If so, would Andrea file as single or MFS?

A: The couple must choose a married filing status, MFJ or MFS. They can file as HoH only if they can be considered unmarried for tax purposes

As a legally married couple living together, Andrea and Beth must file either married filing jointly (MFJ) or married filing separately (MFS). Beth doesn’t qualify for the option to be treated as unmarried for head of household (HoH) filing status purposes.

Filing status choices for married couples

For tax purposes, legally married same-sex couples must choose a married filing status. Marital status under §7703(a) is determined at the close of the tax year. Just as with other-married couples, it doesn’t matter if the couple got married on Jan. 1 or Dec. 31.

In some instances, a married individual may be treated as unmarried, i.e. file as HoH, if:

  • the individual maintains a home for a dependent, and
  • lives apart from their spouse at all times during the last six months of the year.

Although Beth may have continued to maintain a home for her son (we do not have details on household support once she and Andrea lived together), the couple live in the same household so Beth cannot file as head of household.

Andrea and Beth must either file MFJ or MFS. Filing MFS would probably not be favorable from a tax liability standpoint to either spouse. Also, they may not have considered that at least for 2020, as joint filers, they are under the phaseout threshold for recovery rebate credits. That means they can claim the balance of Andrea’s stimulus money that was not advanced to her as a single filer. For 2021 if their income stays under the threshold, they would be eligible for the recovery rebate credit again when they file their return in 2022, reduced by any advances they get this year. In any case, Andrea and Beth do not have an option to use the single filing status as long as they remain married.

Two Supreme Court cases and their results

Two Supreme Court cases provide certainty for the treatment of same-sex married couples.

In 2013, the U.S. Supreme Court ruled in Windsor* that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment of the U.S. Constitution. Section 3 of DOMA had defined “marriage” as a legal union between one man and one woman and “spouse” as a person of the opposite sex. Before Windsor, married same-sex couples could not choose a married filing status for federal tax purposes, even if they could do so for their state taxes.

After Windsor, the IRS and all federal agencies (such as the Social Security Administration) were required to treat legally married same-sex married couples in the same way as other-married couples for all purposes. The issue still remained, however, as to whether all states were required to follow Windsor. By 2015, only 37 states and the District of Columbia allowed marriage for same-sex couples, and not necessarily in a consistent manner.

In 2015, the Supreme Court ruled in Obergefell v. Hodges that states are required to issue a marriage license between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed in a different state. Note that here “state” could also mean a foreign country that allows and performs legal marriages for same-sex couples.

After the Windsor and Obergefell decisions, which apply to all open tax years, all legally married couples use the same rules to determine their federal and state filing status.

* U.S. v. Windsor, No. 12-307 (U.S., June 26, 2013)

** Obergefell et al. v. Hodges, Director, Ohio Department of Health, et al. June 26, 2015

Originally published in the April 14, 2021 edition of TAX in the News.

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