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Posted in LGBT

Updated 03/16/2011 at 3:51 p.m. PDT

In California, Committed Gay Couples Can’t Use TurboTax This Year

IRS Changes for Same Sex Families Too Complex for Tax Prep Software

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By on March 16, 2011 - 11:59 a.m. PDT

Gay couples in California – whether registered domestic partners or married – won’t be able to use the popular software TurboTax to file their tax returns this year.

TurboTax has been working to update its software to account for new tax rules that apply only to committed same sex couples in three states: California, Washington, and Nevada. But in an e-mail Tuesday night company spokesperson Ashley Kirkendall said, “This is a very complicated tax area and, unfortunately, we are not able to provide the step-by-step guidance that our customers are accustomed to at this time.”

TurboTax tried, but couldn’t figure it all out in time for this tax season.

So the company has this advice for gay couples: “Seek professional guidance from a CPA or Enrolled Agent.”

The Bay Citizen broke the story in January about how a 2010 IRS decision requiring income splitting for committed gay couples would make it difficult to file returns. That’s because the rest of the tax code is still governed by the Defense of Marriage Act, which only recognizes heterosexual marriages as legit.

Previously, the decision had been widely reported with positive fanfare – as a step toward equality for gay families. (The decision could benefit some affluent gay couples.)

But in January experts warned that even though it was a gesture from the feds (a first, actually) towards equal treatment for gay couples in taxes, in practice it would make filing returns remarkably complicated (ever play Jenga?). They warned that e-filing would not be possible, and the only way to correctly fill out returns would be to hire professional accountants. In California alone, an estimated 60,000 gay couples are impacted.

At the time that first story was published, some online tax blogs attacked the experts, calling their concerns misguided, misinformed and alarmist.

But the experts were right.

The returns have turned out to be so complex that some San Francisco accountants are charging more than double their normal fee. Couples who once did their own returns have suddenly found themselves paying hundreds of dollars for professional assistance they never budgeted for, and in some cases can’t afford – an expense straight couples are not required to pay.

All these mandatory accounting fees have led some to now call the IRS decision a de facto tax on gay couples.

That’s an idea that’s not getting much fanfare.

Scott James
Scott is a columnist for The Bay Citizen and The New York Times. He has been telling the stories of San Francisco and the Bay Area for nearly 15 years. He founded the underground ezine ... View Profile
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