Methodology: Same-sex spouses lose big on taxes

CNNMoney asked tax preparer H&R Block to run a variety of scenarios comparing tax liabilities of same-sex and opposite-sex families for our story about gay marriage and taxes. Here's how H&R Block's Tax Institute did the math.

General assumptions:

--2011 tax year

--No itemized deductions; the standard deduction is used for all scenarios

--Wages are the only source of income

--The families in the first three scenarios do not live in community property states; the families in scenarios four and five live in a community property state

Scenario 1: The stay at home parent (no child tax credit)

In the first scenario, we compare a married filing jointly couple with two kids to a same-sex family (also with two kids). One spouse works and earns $100,000 in wages; the other spouse cares for the children. The same-sex earner, who has a base salary of $100,000, must include health insurance premiums of $5,000 in income for insurance paid by his employer to cover his partner.

The married filing jointly taxpayer has four exemptions (two for married filing jointly and two for the children). The same-sex taxpayer files as head of household and claims himself, the two children, and the same-sex spouse (as a qualifying relative), also for a total of four exemptions.

No other income or deductions are reported.

They tried to deduct what?!

The married filing jointly couple's net federal tax liability is $10,656, vs. $15,199 for the same-sex household, costing the same-sex couple $4,543.

Note: If the same-sex spouse did not have health insurance and the same-sex wage earner's income was also $100,000 (instead of $105,000), the married filing jointly couple's tax liability would be reduced and the cost for being unable to file a married filing jointly return would be $3,293 instead of $4,543.

The difference is due to a higher standard deduction for married filing jointly and how the tax rate brackets work. More of the head of household taxable income is exposed to tax at the 25% rate than the married filing jointly taxable income.

Scenario 2: The stay at home parent (child tax credit included)

This scenario is the same as Scenario 1, but the child tax credit has been included. The filing status and earnings are the same, but while the child tax credit can be fully claimed by the married filing jointly couple, the same-sex couple is in the phaseout range for the child tax credit (for a head of household taxpayer, the CTC begins to phase out with AGI of $75,000, vs. AGI of $110,000 for married filing jointly taxpayers).

Thus, the married filing jointly family has a full $2,000 CTC because the phaseout has not occurred. The credit is reduced to only $500 for the same-sex couple because of the phase-out. Thus, the cost of being unable to file an married filing jointly return is increased to $6,043 ($4,543 + $1,500) when the CTC is introduced.

Scenario 3: Dual wage earners, no children

In this scenario, unrelated to the first two, both spouses work, each earns $100,000, and there are no children. The married couple has AGI of $200,000 and a net federal tax liability of $38,750. The two same-sex spouses also earn a combined AGI of $200,000 (there is no inclusion of health insurance in the income of one partner).

However, the net federal tax liability for the same-sex spouses is a combined $37,928 ($18,964 for each as a single taxpayer, doubled). This is $822 less than the married couple pays -- an example of the traditional "marriage penalty."

Scenario 4: Stay at home parent (no child tax credit) community property state

Scenario 4 is identical to Scenario 1, except that the taxpayers live in a community property state, such as California. In this regime, income earned by one partner is considered distributed equally to both partners, so the $100,000 earned by partner 1 is reported as $50,000 each.

In this scenario, the married filing jointly couple pays $1,256 less in federal tax than the combined same-sex partners do. This is attributable to the health insurance premium of $5,000, which is additional income taxed at the 25% rate.

Scenario 5: Stay at home parent (child tax credit included), community property state

This scenario is the same as Scenario 4 (community property state), except the CTC is included. In this case, the net federal tax liability difference remains at $1,256 (the married filing jointly couple pays less because of the health insurance).

Unlike the introduction of the CTC in Scenario 2 (over Scenario 1), here the income-splitting between the same-sex partners eliminates the phaseout, with each partner earning $52,500, well below the phase-out of $75,000 for single taxpayer.