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Tax Tips Part 2: Married, Separated, Divorced

Posted By Carrie Warner || 2-May-2015

As of this moment in time—and for the 2014 tax year—same sexmarriage is legal in South Carolina. So whether you filed by the April 15 deadline, or whether you are filing for an extension, same sex couples may file jointly as married, both federally and statewide. For couples that have obtained a civil union or domestic partnership in another state, however, this is not deemed a legal marriage in the State of South Carolina. That means these couples cannot file federal, or statewide, taxes jointly as a married couple. The law is clear on this matter—there are no loopholes or contingencies. The reason being, essentially, is that civil unions, or domestic partnerships, are unique to the particular state in which the union was performed. All laws and rulings pertain only to that particular State’s rights and benefits. Because of these key differences, same sex couples who are in a civil union or domestic partnership, and who reside in the state of South Carolina, should consult a reputable accountant prior to filing 2014 tax returns.

What about 2015?

That is a good question. There are currently a lot of eyes on the United States Supreme Court, which recently heard oral arguments in the DeBoer v. Snyder case concerning the validity and recognition of same sex marriages in the United States, including South Carolina. The DeBoer case affirmed the State of Michigan’s ban on both legality and recognition of same sex marriages, leaving the ultimate national determination of these two issues up to our United States Supreme Court. A decision will likely be handed down in June or July of this year.

What does this mean for same sex couples and taxes?

Everything. There is a lot riding on this decision for same sex couples all across the country, not just in South Carolina. A win by gay couples contesting the state bans on same sex marriage will mean that all states must recognize the marriages of all gay couples. A defeat would nullify all legally contracted gay marriages. As for taxes, it would create utter chaos for couples that: 1) have filed federal and state tax returns together for years, in which they were recognized as a married couple, 2) named their spouses as beneficiaries on retirement plans, or 3) provided health insurance for their spouse, and so on. If U.S. Supreme Court upholds the ban, it would essentially reverse the financial and federal entitlements of millions of couples that, as of today, are recognized as legally married in their respective state. The practical effects of such a decision must be a factor in the court’s decision on this issue.

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