Gay couples in Indiana could pay more for tax filings

Back to TopCommentsE-mailPrintBookmark and Share

Conflicting state and federal policies will likely cost Indiana same-sex couples more when they file their tax returns this year, experts say.

The Internal Revenue Service decided to recognize gay marriages after the U.S. Supreme Court struck down sections of the Defense of Marriage Act. But about half of the nation's states have not adopted the federal tax policy, and a measure introduced in the General Assembly last week is on track to ensure Indiana does not, either.

Department of Revenue spokesman Bob Dittmer said staff analyses show that keeping the current policy shouldn't cost the state or individuals more on actual taxes, but lawyers and accountants say the price tag for filing likely will be higher.

The split means Indiana same-sex couples who choose to take advantage of the new federal policy will have to prepare five tax returns this year: one jointly for federal taxes, two each to file separately for the state and two mock federal returns with the split assets, said John McGowan, who heads the lesbian, gay, bisexual and transgender practice at Northern Trust. The mock federal returns would be the basis for the separate state returns.

Each one can take time, and money, to prepare.

"That's one of the true burdens that same-sex couples face when they're living in a non-recognition state," McGowan said. "There are tangible costs associated with that."

Gay-marriage legalization advocates say about 11,000 same-sex couples live in Indiana, based on 2010 Census numbers.

Indianapolis resident Tim Orient said he expects to pay nearly twice the previous fees for his tax returns this year now that his marriage to his husband is recognized by the federal government. He said he spent about $400 on tax preparations for himself last year.

"We're very frustrated with all this," Orient said.

Splitting incomes for the state and joining them for the federal filings also could mean same-sex couples in states that don't recognize their marriages will be flagged for audits because each spouse will only report a fraction of their combined income to the state, said Anthony Infanti, a University of Pittsburgh law professor who specializes in tax issues for same-sex couples.

Dittmer said there are no concerns about Indiana same-sex couples being audited because of the new federal policy.

Indiana was on track to match IRS tax policies this year until Sen. Brandt Hershman, R-Buck Creek, made a late-session change that would prevent the state from adopting the same-sex marriage provision. Indiana does not recognize gay marriage.

Legislative negotiations on the bill — which would maintain current policy prohibiting same-sex married couples from filing joint state tax returns — are underway. Final approval from the General Assembly and Gov. Mike Pence is needed before the bill can become law.

Hershman says the changes would prevent conflicts between the state ban and tax code, which have led to lawsuits in other states.

"Frankly, that is a different issue for a different bill," Hershman said. "It would not be appropriate ... for us to adopt that change that would be in direct conflict with state law."

Missouri is recognizing same-sex marriages for tax purposes only, even though the state constitution bans the practice. Gov. Jay Nixon's executive order spurred lawsuits both by those hoping to legalize gay marriage in the state and those who say the measure is unconstitutional.

A Missouri House Republican last week filed a resolution to impeach Nixon for the order.

The rapid pace of changes to gay-marriage policies also means software companies have to monitor district courts and legislation closely, and Dittmer said there currently isn't a clear way to track whether same-sex couples are not filing jointly already in Indiana.

"The systems have not been able to keep up with the pace of these changes," McGowan said. "We're going to be operating on the honor system for some period of time before the system is enhanced to help enforce legislation and policies."

States with different same-sex marriage tax laws likely will unearth discrepancies and other complications with federal policy with time, Infanti said.


  • Solution
    Scrap the entire tax code, implement a flat tax, get government out of marriage. Problem solved.
  • State Tax
    Curtains, you really don't have a choice. The federal return flows into the state return. To avoid completing the extra returns, the couple would need to file a joint state return that would raise a red flag.
  • I would not do it
    Honestly if I was in this situation I would consider not doing another return and using the federal return. For one the state says you have to do the seperate return but do not send it in, there is no way to match. Second how would the state take you to court for following the rules?

    Post a comment to this story

    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
    You are legally responsible for what you post and your anonymity is not guaranteed.
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
    Subscribe to IBJ
    1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

    2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

    3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

    4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

    5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?