Remember that this year’s tax deadline is April 18 rather than April 15. That is because Emancipation Day, April 16, the day that President Lincoln signed the Compensated Emancipation Act, is a legal holiday in DC. And since it falls on a Saturday this year, it is being officially celebrated on April 15, traditionally known as Tax Return Day. This holiday extends this year’s deadline for filing timely 2010 tax returns (or any other returns that otherwise would have been due on April 15) to April 18. If you are in a same-sex couple that is recognized by your state this April 18 deadline might be important to you regarding your 2007 tax year.
There is a three year statute of limitations that applies generally to your right to file an amended tax return. So if there is any reason to recompute your taxes for tax year 2007, you have until April 18 this year to file an amended return. If you filed after April 15 in 2007 because you had an extension, then the three year period runs from the date that you actually filed rather than from the April 15 (extended to April 18 this year) date.
Why might a same-sex couple want to file an amended return for 2007? Well, if you were married in Massachusetts (the only state that recognized same-sex marriages in 2007), you might have owed less in tax if you had been able to file jointly. We know that DOMA says you can’t file jointly because you really aren’t married in the eyes of the IRS, but we also know that a federal district court in Massachusetts has ruled that DOMA is unconstitutional. We also know that President Obama and Attorney General Holder believe that DOMA is unconstitutional. Well, if it is unconstitutional and if you were legally married in Massachusetts in 2007 then you should have been able to file a joint return. If you don’t file an amended return by April 18, you will lose the chance to make your claim for a refund because of the statute of limitations.
Let me be clear – no one is required to file a refund. So, if you want to ignore the argument that you are married for federal tax purposes (e.g., because you might be subject to a marriage tax penalty) you are free to do that so long as DOMA is on the books. But if you want to protect your potential refund for 2007 by filing jointly, you should do that soon (at least by April 18).
Other folks who might want to consider filing an amended return are RDPs in California, who in 2007 were subject to the state community property regime. As I have blogged in the past, RDPs are entitled to split their community earnings 50/50. In a world of progressive tax rates, splitting income 50/50 can often lead to tax savings – at least in the case of couples with uneven income. If partner A has $100K income and can report only $50K while assigning the other $50K to his or her partner, it means that some of the transferred income will be taxed at the lower introductory brackets, thereby saving taxes overall.
Some people have suggested that the higher earner can amend and report only half of his/her income while the other partner is not required to amend. That is because no one is required to file an amended tax return if the original return was filed on the basis of reasonable interpretations of the tax law and the facts at the time it was filed. Technically, that may be true. But I would not advise couples to claim a refund for the higher income partner unless they are willing to be consistent and report the transferred income on an amended return by the other partner.
Here’s a recent blog post on this topic – one that I neither endorse nor reject – but offer to you as additional information about the thinking on this topic. Connect here.
