Same-sex couples: Beware the marriage penalty

Same-sex couple: 'Freedom is priceless'
Same-sex couple: 'Freedom is priceless'

After notching a major civil rights victory this week, some same-sex couples need to brace for a less exciting outcome: a tax hit known as the marriage penalty.

On Wednesday the Supreme Court shot down the Defense of Marriage Act, making it possible for same-sex couples who are married at the state level to access more than 1,000 federal benefits that were previously reserved for opposite-sex couples -- including the ability to file their federal taxes jointly or "married filing separately."

For some couples, that new right will be costly. Many same-sex couples who file jointly will have to pay the so-called marriage penalty, taxes they wouldn't have to pay if they were considered single.

Related: The financial impact of the same-sex marriage ruling

Couples in which both spouses earn similarly high incomes are more likely to be hit with a marriage penalty. Married couples also have the option to file as "married filing separately," but this is rarely beneficial. Often, couples will end up owing the same amount as filing jointly or they will get hit with an even bigger marriage penalty, said Anthony Infanti, a University of Pittsburgh law professor who specializes in tax issues for same-sex couples.

For a same-sex couple where each spouse earns $100,000, the additional liability of filing jointly would be a little more than $3,000 -- which is the same amount of extra tax they would owe if they opted for "married filing separately," according to analysis H&R Block conducted for CNNMoney, assuming the couple takes a standard deduction and no tax credits.

Brian Esser and Kevin O'Leary, from New York City, estimate they will owe an additional $5,000 in income tax by filing their tax returns jointly. They both work full-time and earn similar incomes -- Esser as a lawyer at Baker Hostetler and O'Leary as a senior writer for Us Weekly -- so combining incomes will place them in a higher tax bracket.

Related: Same-sex ruling: 'A huge relief'

On the flip side, the couple will likely no longer owe $1,000 in tax on the health insurance O'Leary receives through Esser's employer-sponsored plan.

But what matters most to them is the federal government's recognition of their family "whether that's legally, financially or emotionally," said Esser.

"Any additional taxes we might have to pay are far outweighed by the safety and security we will get from the federal government officially recognizing our family," he said.

The same goes for Sean Liphard and Auntré Hamp, from Washington, D.C, who expect to pay an extra $1,950 per year when filing jointly.

"You can't put a price tag on equality," said Hamp. "The overturning of DOMA is bigger than the financial effects ... for me it's about living in a nation that chooses equality over discrimination, where we all are granted the same liberties, including marrying the person you love and having that marriage recognized by our government."

Related: Which states allow same-sex marriage?

While some same-sex couples will take a big hit by filing jointly, others will benefit hugely. Couples with wildly different incomes -- where one spouse earns no income and the other has a high-paying job, for example -- could lower their tax bill by thousands of dollars because they will fall into lower tax brackets when their incomes are merged.

"Marriage is kind of a mixed bag for people -- it depends on your circumstances," said Infanti. "Some people who have been able to avoid the marriage penalty up until now will get the marriage penalty and those who have been denied a marriage bonus will get that."

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