Virginia Department of Taxation Issues Guidance on Same-Sex Couple Returns
Fairfax, VA (Law Firm Newswire) January 30, 2014 – Legally married same-sex couples must file separate tax returns in Virginia.
Virginia may be for lovers but, according to a recent decision by the Virginia Department of Taxation, “lovers” may not include same-sex, married couples — especially those attempting to file a joint tax return. The state’s non-recognition of same-sex marriage for the commonwealth’s tax purposes will remain in force, even though LGBT couples are now permitted to file joint federal tax returns.
The Department of Taxation decision, which was announced on November 8, 2013, confers separate, parallel fiscal statuses for same-sex couples who married in states where same-sex marriage is legal but who now reside in Virginia (where same-sex marriage is not legal).
“Same-sex couples who married in New York, Massachusetts or other states where same-sex marriage is legal, but who have established residence in Virginia, need to be aware of this distinction in the commonwealth,” said Lisa McDevitt, a prominent Vienna and Fairfax estate planning and family law attorney. “They also need to be aware that they can still avail themselves of a joint return for federal filing purposes.”
The Department of Taxation announcement was necessary in the wake of the landmark case United States v. Windsor, 570 U.S. 2675 (2013). In Windsor, the Supreme Court ruled that the third section of the Defense of Marriage Act (DOMA) was unconstitutional under the Due Process Clause of the Fifth Amendment.
The high court handed down its ruling in Windsor after a widow sought to claim the federal estate tax exemption for surviving spouses. The couple were legally married in Ontario, Canada, and then moved to New York, where one of them died. She left her entire estate to her surviving spouse. At the time the lawsuit was filed, same-sex marriage was not yet legal in New York state.
In practical terms, whenever a LGBT couple files a federal joint return, each person will have to recalculate their individual federal income tax liability — either as single or as head of household — when determining Virginia income tax liability. The Virginia-specific rules will also have potential tax consequences for businesses in the commonwealth.
“Those businesses in Virginia that deduct payments of fringe benefits to their employees’ same-sex spouses and to their dependents on their federal tax forms will have to adjust these deductions on their Virginia tax forms,” McDevitt said.
Lisa Lane McDevitt
2155 Bonaventure Drive
Vienna, VA 22181