Maryland’s same-sex couples will soon be allowed to marry, but they won’t be allowed to file joint income-tax returns — making Maryland the first state to legalize gay marriage without giving extra tax privileges to the couples.
The state comptroller’s office says it plans to continue requiring same-sex couples to file separate state-level income-tax returns as long as federal law requires separate federal returns, even though all other states recognizing same-sex marriage that collect income tax allow the couples to file jointly.
Maryland officials say they have no immediate plans to change the state’s policy, even though they acknowledge that separate returns have added to paperwork for same-sex couples and sometimes force them to pay higher taxes.
“Unless federal law changes, we can’t change anything,” said Kim Frum, spokeswoman for Maryland Comptroller Peter V.R. Franchot, a Democrat. “We are aware of what other states do, but that’s not how we do things.”
Ms. Frum said the state’s income-tax rules are bound by federal regulations because the state tax is calculated using adjusted federal gross income as a starting point.
One such regulation is the federal Defense of Marriage Act (DOMA), which prohibits gay couples from filing joint federal returns and, according to the comptroller, also bars them from doing so at the state level.
The U.S. Supreme Court will decide next year whether to uphold or overturn DOMA, which was passed in 1996 but recently has been struck down as unconstitutional in some lower courts.
Ms. Frum said a change or rejection of the federal law is the only way that Maryland could enact legislation allowing gay couples to file jointly, although the state attorney general’s office says it is looking into the issue.
Joint filing can reduce or increase a couple’s tax liability, depending on such factors as total household income and income disparity between spouses, according to the comptroller’s office.
Nicole D’Isa, a Rockville resident who married her wife in Canada in 2005, said their tax burden has increased because they cannot file a joint return.
“Instead of two tax returns, we have to do four tax returns,” she said. “The way the brackets work, we end up paying more taxes as individuals.”
Since Maryland does not allow same-sex joint filing, its tax policy runs counter to those in Connecticut, Iowa, Massachusetts, New York, Vermont and the District — all of which allow gay marriage and require all married couples to either file jointly on state and local tax returns, or declare themselves married but filing separately.
Couples in those states must still file separate federal returns, but they also fill out a second hypothetical federal return as a couple. The federal adjusted gross income on this joint return is used as the starting point for their joint state return.
“They’re married, so we make them file as married,” said Sarah Kaufman, spokeswoman for Connecticut’s Department of Revenue. “We’re basically reading the law to mean that same-sex couples have the exact same rights as heterosexual couples.”
Maryland’s same-sex marriage law goes into effect on Jan. 2, meaning that it won’t have tax implications for newly married couples until residents file their 2013 taxes in early 2014. Maryland has recognized same-sex marriages from other places since 2010.
Maine will legalize same-sex marriage on Dec. 29, and couples who marry after then but before the new year will have to file jointly this tax season.
New Hampshire and Washington, the two other states to legalize gay marriage, do not have state income taxes.
Janis McDonagh, a partner at New York-based accounting and advisory firm Marcum LLP, said she expects that Maryland will change its policy to one similar to those in other gay-marriage states. Marcum has a branch of its practice specifically addressing financial issues in the gay community.
She also questioned the legality of the state recognizing gay couples as married but allowing, much less requiring, them to file taxes as though they are single.
“If you’re married in the state, I don’t see how you could file a single tax return,” she said. “As a tax attorney, I can’t imagine how they would come to a different conclusion.”
A spokesman for Maryland Attorney General Douglas F. Gansler, a Democrat, said his office is working fast to decide how the new same-sex marriage law will affect a number of state policies.
Spokesman David Paulson said the attorney general’s office is working on an advice letter to clarify how gay marriage will affect the state’s income-tax policy as well as issues such as Medicaid benefits, parental rights and spousal death benefits.
He said the letter will likely be completed in early- to mid-January, around the time that the General Assembly is scheduled to convene.
“It could raise issues that lawmakers would want to deal with,” he said.