Same-sex married couples face complicated tax issues, new tax laws

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KPCC / Sanden Totten

Briana and Laura Schuchardt were married in 2008. But since the federal government doesn't recognize their marriage, they are left in a legal grey zone that makes things like name changes and tax returns exceedingly complicated. Briana says she's even struggled getting a passport.

Ready or not, it's income tax season. Time to call up your accountant or load the latest edition of TurboTax. But for same-sex married couples in California, tax time isn't that easy. New federal rulings place this group in a legal gray zone, with complicated returns and lots of unanswered questions.

On a Tuesday night at the Los Angeles Gay and Lesbian Center, a cluster of couples sits in an auditorium with pained looks on their faces. They're about to talk... taxes.

Tax attorney Wendy Hartmann stands at the front of the room. She plows through a PowerPoint presentation on the new federal rules for registered same-sex partners. "So many people don't know what the new federal tax requirements are and they affect 2010."

Hartmann goes on to explain that for the first time, registered same-sex couples in California are required to combine their incomes on federal tax returns. So if one partner made $60,000 a year and the other made 40, for a combined total of 100 grand, they each file as if they made $50,000.

But because the federal government doesn't recognize their partnerships, they still have to file that $50,000 on separate returns.

The law only affects California, Nevada and Washington – states that make provisions for same-sex domestic partnerships and community property. And, Hartmann says, no law has determined how these couples are supposed to handle Social Security or self-employment withholdings.

"It's just confusing!" exclaims Laura Schuchardt. "I just feel like we have to go through so many more avenues just to get done what regular straight couples can do on TurboTax!"

Schuchardt is an accountant herself, and even she's been scratching her head over the rules. She came with her wife Briana, a schoolteacher.

They married in 2008 during the brief window when same-sex partners could wed in California. She says that even before the new rulings, it wasn't easy for them to file as a couple.

"For last year's taxes we found a firm," Schuchardt explains. "We told them our situation and they said, no problem, they can do what they need to do. And when I looked at our returns, they filed them incorrectly."

The Schuchardts are looking for a new accountant.

Some married couples will save money by combining their incomes on their tax forms. But it'll cost Don Napoli and Tony Poland.

Napoli manages money for an entertainment company and brings in a decent income. But his husband, Poland, was planning on returning to school so he could study sports medicine.

Napoli says that because his husband will share his income now, they won't qualify for federal student loans. "So they're having their cake and eating it too," Napoli says. "Because they are still not legally acknowledging us as being married but they are attaching our moneys to stop us from getting other things."

And it's not just income taxes. Bureaucracy dogs these couples. Some say they've struggled with processes like changing their names and obtaining passports.

In California, about 18,000 couples legally married before voters outlawed same-sex marriage in a referendum. Until the courts figure out which side will prevail, those couples navigate a strange legal limbo.

As exasperated as Tony Poland feels, he considers the new federal income tax laws a step in the right direction since they're the next best thing to filing jointly.

"Little by little it's coming around," Poland says. "But in the meantime we're having to do a whole extra song and dance beyond what other people have to do."

Poland says he still feels lucky to be one of the 18,000 same-sex married couples in California. Even if it means more paperwork during tax season.

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