House of Windsor

Of course we are not referring to the British Royal Family, but the infamous US Supreme Court case of United States vs. Windsor, which was handed down back on June 26, 2013. What Windsor was about is the constitutionality of the Federal Defense of Marriage Act, enacted by Congress back on September 1, 1996. The Act did not recognize same-sex marriages, which the Court ruled it unconstitutional in Windsor. So, what are the tax ramifications of Windsor? It is simply going back in time amending a couple’s same-sex couple’s filing status.

Marriage is an institution that is defined, established, recognized, and regulated by states, per the Tenth Amendment of the US Constitution, which is one of the arguments that Justice Anthony Kennedy wrote in his leading opinion of Windsor on the constitutionality of the federal Defense of Marriage Act. So, looking from a tax point of view, when deciding if someone is married or not, generally one would look to the law of the state of the taxpayer’s residence, and/or the state where the marriage took place, because married filing jointly is one of (if not the best) filing statuses, and one of the requirements for married filing jointly, is to be legally married.

So what happened for the same-sex couple from 1996 – 2013? Their problem was that, the same-sex couple could not file as married filing jointly (let alone married filing separately), because the federal Defense of Marriage Act forbid the recognition of a same-sex couple, under federal law, including federal tax law. The only choice for the same-sex couple is to file two separate tax returns, as single. Furthermore, when California started to recognize same-sex marriages, as civil unions (or domestic partnerships) in 2000, thusly allowing a same-sex couple the same rights as a married couple, including filing a joint return, it caused more confusion on the issue. The problem is that California is a community property state, hence any income earned by a married couple is “community income” to the entire marriage, and one-half of a spouse’s “community income” is the other spouse’s income. Thusly, a same-sex couple would have to do two federal tax returns for each spouse, as single, taking community property into account, and a joint tax return for California, some vast confusion!

Now, with the Windsor ruling, a same-sex couple California that had to file two separate tax returns as single filers, could now amend those federal tax returns (going back no more than three years), as married filing jointly. So, if you are one of those effected same-sex couples, who had to file two separate tax returns, as single filers, please contact us at info@kayatax.com and we can help you amend these back year tax returns.