Category: Estate Tax
Tags: Gift Tax, NC income tax, Retirement, Tax


NC Tax Questions for Same-Sex Marriages

Posted on: February 6th, 2014
Same-sex marriages are not legal in North Carolina, however same-sex couples who reside in North Carolina and were legally married in a jurisdiction that recognizes these marriages may have questions about North Carolina taxes.
After last year’s groundbreaking ruling in the United States vs. Windsor case, the IRS now recognizes married same-sex couples for all tax purposes, regardless if they reside in a state that does not grant same-sex marriages. The federal case has resulted in changes across the nation on the state level, including North Carolina, affecting employers of individuals in a same-sex marriage, retirement plans, income taxes, and more.
 
With the many changes and new requirements, same-sex couples in North Carolina who were married in another jurisdiction are trying to navigate tax laws. The North Carolina Department of Revenue has created a Frequently Asked Questions section specifically for married same-sex couples. Read the full list of questions and answers at the previous link.
 
The FAQs address:
 
  • How do employer-provided health insurance policies for spouses affect taxable wages?
  • Can couples file as ‘married filing jointly’ or ‘married filing separately’ on their North Carolina income tax return?
  • Do withholding exemptions change?
For same-sex couples married with children:
 
  • Are adopting parents eligible for the adoption credit for qualified adoption expenses? Are both parents?
  • Which spouse can claim a North Carolina tax credit?
  • Which parent can claim the child as dependent?
 
Couples should meet with a North Carolina tax attorney to ensure appropriate forms are filed. Last Fall the Department of Revenue released a tax directive for same-sex spouses, part of which explains couples will be required to include a copy of their federal return with their NC income tax return, and must file a separate NC income tax return on Form D-400 “using the filing status of single or, if qualified, head of household or qualifying widow(er) and must complete a separate pro forma federal return for North Carolina purposes.” Annual tax reviews are important, and this year it is especially critical for married LGBT couples.
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