Tax Relief Ahead for Virginia’s Same-Sex Couples

October 9, 2014

Same-sex couples can now file joint Virginia income tax returns. This is a result of the U.S. Supreme Court’s October 6, 2014 refusal to review three Circuit court decisions which ruled that bans on same-sex marriage are unconstitutional. These decisions are now considered final in their respective circuits, and will impact income tax filing requirements in a number of states.

On October 7th, the Virginia Department of Taxation issued a Tax Bulletin regarding this development, indicating that the additional compliance burdens required of same-sex couples will end. Last year, in response to the U.S. Supreme Court’s decision that a federal law’s definition of marriage as being between a man and a woman was unconstitutional, Virginia issued a bulletin addressing requirements for same-sex couples filing Virginia income tax returns in light of the Commonwealth not recognizing same-sex marriage. The Department required same-sex couples in Virginia that filed joint returns for federal income tax purposes to complete two pro forma single federal income tax returns and use that information to fill out two single Virginia income tax returns. Instead of preparing one federal return and one Virginia return, same-sex couples had to prepare five returns (i.e., three federal and two state returns).

The Bulletin, which specifically repeals the Department’s previously issued mandate,provides that same-sex couples legally married under any state law can file Virginia income tax returns on a joint basis. Alternatively, same-sex couples may file their Virginia income tax returns as married filing separately. This will alleviate the compliance requirements previously required for same-sex couples in Virginia.

These developments also provide a potential refund opportunity. A same-sex married couple that filed a joint federal income tax return and separate Virginia income tax returns in a prior year has the option to amend their Virginia income tax returns for the previous three taxable years to jointly filed returns. Based on the Census Bureau’s estimates of same-sex households by state, the Supreme Court’s decision to let the decisions in the Circuits stand could impact the approximately 3,800 same-sex couples living in Virginia.

If you have any questions or want more information regarding this development, please contact your Aronson tax advisor or Michael L. Colavito, Jr. at 301.231.6200.