Same-Sex Couples

  1. Is a same-sex couple that is considered lawfully married for federal tax purposes considered married for Wisconsin income tax purposes?
  2. For federal tax purposes, a lawfully married same-sex couple must generally file their federal return as married filing jointly or each must file as married filing separately. When does this first apply?
  3. Can a same-sex couple that files a joint federal return file a joint Wisconsin return?
  4. A member of a same-sex couple files a federal return as married filing separately? What filing status is used for Wisconsin?
  5. How do same-sex individuals that are considered married for federal tax purposes file their Wisconsin income tax returns?
  6. Can an amended return be filed for Wisconsin to change filing status?
  7. As a member of a same-sex couple that is considered married for federal tax purposes, I can add my same-sex spouse to my employer-provided health insurance without having to impute taxable income. Does this apply for Wisconsin?
  8. Because I added my same-sex spouse to my employer-provided health insurance, my employer is required to report imputed income on my Wisconsin Form W-2. How is the amount of imputed income determined?
  9. I am filing an amended federal return to exclude imputed income related to my employer-provided health insurance reported on 2012 and prior year returns. Can I also file an amended Wisconsin return?
  10. For federal tax purposes I have a health savings account that pays qualified medical expenses of myself and my same-sex spouse. What is the Wisconsin treatment of the health savings account?
  11. For purposes of employer-provided health insurance and health savings accounts, when does a same-sex partner qualify as a dependent?
  12. For federal tax purposes, my same-sex spouse and I each made contributions to a traditional IRA using the spousal IRA limitations. Are the amounts contributed to each IRA deductible for Wisconsin?
  13. Am I subject to a Wisconsin penalty for an excess contribution to my IRA, even if I do not owe a federal penalty?
  14. What is the tax treatment of a traditional IRA that I inherited from my same-sex spouse?
  15. Do the required minimum distribution rules that apply to retirement accounts change when applied to a same-sex couple?
  16. What is the tax treatment if I use my health flexible spending account to pay medical expenses for my same-sex spouse?
  17. How do I determine my credit for tax paid to other states if I file a joint return in the other state?

  1. Is a same-sex couple that is considered lawfully married for federal tax purposes considered married for Wisconsin income tax purposes?

    No. Wisconsin does not recognize a same-sex marriage. Article XIII, section 13 of the Wisconsin constitution prohibits legal recognition of same-sex marriages. This section provides that "Only a marriage between one man and one woman shall be valid or recognized as a marriage in this state. A legal status identical or substantially similar to that of marriage for unmarried individuals shall not be valid or recognized in this state."

  2. For federal tax purposes, a lawfully married same-sex couple must generally file their federal return as married filing jointly or each must file as married filing separately. When does this first apply

    The requirement to file as married filing jointly or married filing separately applies to returns filed on or after September 16, 2013. This includes:

    • Returns for tax year 2012 filed on or after September 16, 2013
    • Late filed returns from prior years filed on or after September 16, 2013
    • Returns filed for tax year 2013 and going forward
  3. Can a same-sex couple that files a joint federal return file a joint Wisconsin return?

    No. Section 71.03(2)(d), Wis. Stats., provides that a husband and wife may file a joint return for income tax purposes.

    Each member of the same-sex couple must file their Wisconsin income tax return separately using the filing status of single or, if qualified, head of household.

  4. A member of a same-sex couple files a federal return as married filing separately? What filing status is used for Wisconsin?

    The member of a same-sex couple that files a federal return as married filing separately must file a Wisconsin return using a filing status of "single" or, if qualified, as "head of household."

  5. How do same-sex individuals that are considered married for federal tax purposes file their Wisconsin income tax returns?

    In the case of same-sex individuals who are considered married for federal tax purposes:

    • Each individual must file a Wisconsin income tax return on Form 1 or Form 1NPR (if a nonresident or part-year resident of Wisconsin). Form 1A or Form WI-Z may not be filed for Wisconsin.
    • Each must file their Wisconsin income tax return separately using the filing status of single or, if qualified, head of household.
    • Same-sex individuals who file a joint federal income tax return must complete a new Wisconsin form, Schedule S, Allocation of Income to be Reported by Same-Sex Couples Filing a Joint Federal Return. Schedule S shows the amount of income as reported on the federal return that is allocable to each individual and determines the federal adjusted gross income to be used for Wisconsin tax purposes. Wisconsin marital property law does not apply to this allocation. A copy of Schedule S that is to be used for 2012 returns filed on or after September 16, 2013, is available from our website at http://www.revenue.wi.gov/forms/2012/taxind12.html. A copy of Schedule S that is to be used for late filed returns for years prior to 2012 is available at http://www.revenue.wi.gov/html/formpub.html. Select the year for which you need the form.
    • For tax year 2012 and late returns from prior years filed on or after September 16, 2013, returns may not be e-filed and must be filed on paper.
    • A complete copy of the federal return and Schedule S must be attached to Form 1 or 1NPR.
  6. Can an amended return be filed for Wisconsin to change filing status?

    For tax year 2012, same-sex couples who filed their tax return before September 16, 2013, may choose (but are not required) to amend their federal tax returns to file using a filing status of married filing jointly or married filing separately. For tax years 2011 and earlier, same-sex couples who filed their tax returns timely may choose (but are not required) to amend their federal tax returns to file using a filing status of married filing jointly or married filing separately provided the period of limitations for amending the return has not expired.

    Although amended returns may be filed for federal tax purposes to change the filing status to married filing jointly or married filing separately, amended returns may not be filed for Wisconsin to change the filing status.
  7. As a member of a same-sex couple that is considered married for federal tax purposes, I can add my same-sex spouse to my employer-provided health insurance without having to impute taxable income. Does this apply for Wisconsin?

    No. Wisconsin follows the Internal Revenue Code and excludes from income contributions to an accident or health plan for injuries or sickness incurred by the employee, his or her spouse, or dependents. Because Wisconsin does not recognize a same-sex marriage, employers may not exclude from employee income the value of an employer-provided health insurance plan for a same-sex spouse unless the same-sex spouse qualifies as a dependent of the employee.

  8. Because I added my same-sex spouse to my employer-provided health insurance, my employer is required to report imputed income on my Wisconsin Form W-2. How is the amount of imputed income determined?

    The amount of imputed income is equal to the fair market value of the employer-provided health insurance benefit. This is the amount of Wisconsin taxable income that the employer must include on your Form W-2. The fair market value of the insurance provided to your same-sex spouse is determined by your employer and the insurance provider. The Department of Revenue cannot determine the fair market value of the coverage. You should contact your employer for further information.

  9. I am filing an amended federal return to exclude imputed income related to my employer-provided health insurance reported on 2012 and prior year returns. Can I also file an amended Wisconsin return?

    No. Because Wisconsin does not recognize a same-sex marriage, the imputed income is taxable to Wisconsin. You may not file an amended Wisconsin return to exclude the imputed income.

  10. For federal tax purposes I have a health savings account that pays qualified medical expenses of myself and my same-sex spouse. What is the Wisconsin treatment of the health savings account?

    The definition of a health savings account (HSA) requires that it be set up exclusively for the purpose of paying qualified medical expenses for the account holder, their spouse and any dependents. Because Wisconsin does not recognize a same-sex marriage, contributions to an HSA would not be deductible for Wisconsin tax purposes if the HSA provides benefits to a same-sex spouse that is not a dependent. Employer contributions to an HSA that provides benefits to a same-sex spouse would be taxable compensation to the employee and included as taxable wages on the employee's W-2 for Wisconsin.

  11. For purposes of employer-provided health insurance and health savings accounts, when does a same-sex partner qualify as a dependent?

    A same-sex partner is a dependent for purposes of employer-provided health insurance and health savings accounts if all of the following are met:

    • The same-sex partner has the same principal place of abode as the taxpayer and is a member of the taxpayer's household.
    • The taxpayer provides over one-half of the same-sex partner's support for the year.
    • The same-sex partner is a citizen or national of the United States or is a resident of the United States or a country contiguous to the United States.

    This applies only for the employer-provided health insurance and health savings accounts. It does not apply to claiming the same-sex partner as a dependent on the Wisconsin income tax return. For claiming an individual other than a child as a dependent on the income tax return, the individual must have gross income for the calendar year of less than the federal exemption amount ($3,900 for 2013)

  12. For federal tax purposes, my same-sex spouse and I each made contributions to a traditional IRA using the spousal IRA limitations. Are the amounts contributed to each IRA deductible for Wisconsin?

    Under the Internal Revenue Code (IRC), individuals can contribute to their IRA, subject to limitations. For 2013, the contribution limit for an individual is the lesser of $5,500 or the amount of annual compensation. There is a special limitation for spouses filing jointly. The spousal limitation is the lesser of $5,500, or the total compensation of both spouses reduced by the other spouse's compensation.

    Because Wisconsin does not recognize a same-sex marriage, each of the two individuals who filed a joint federal return will file their Wisconsin return subject to their own individual IRA limitation of the lesser of $5,500 or the amount of annual compensation.

    Example: Taxpayer A and Taxpayer B are a same-sex couple who qualify to file a  2013 joint federal income tax return. Taxpayer A has compensation of $50,000 and Taxpayer B has compensation of $2,000. If A and B file a joint federal return, each can contribute $5,500 to a traditional IRA and then claim an $11,000 IRA deduction on their joint return. Because Wisconsin does not recognize a same-sex marriage, the federal spousal IRA provisions do not apply for this couple for Wisconsin. The maximum deductible IRA contribution for Taxpayer A is $5,500 and the maximum deductible IRA contribution for Taxpayer B is $2,000 (the amount of Taxpayer B's compensation).

    In this example, Taxpayer B would also be subject to a Wisconsin penalty for an excess contribution of $3,500. See Question 13.

  13. Am I subject to a Wisconsin penalty for an excess contribution to my IRA, even if I do not owe a federal penalty?

    For a same-sex couple who file a joint federal return, because Wisconsin does not recognize a same-sex marriage, the federal spousal IRA limitations do not apply for Wisconsin. This may result in an individual making an excess contribution to an IRA. See Question 12.

    For federal tax purposes, excess contributions to an IRA are subject to a 6% tax that must be paid each year that excess amounts remain in the IRA. This tax, even if not assessed by the federal Internal Revenue Service, would still apply for Wisconsin purposes. Section 71.83(1)(a)6., Wis. Stats., provides that any person who is liable for a penalty for federal income tax purposes under section 4973 of the Internal Revenue Code is liable for 33% of the federal penalty. In effect, if there is an excess contribution for Wisconsin purposes, then Wisconsin will assess a penalty in the amount of 1.98% of the excess contribution.

    Taxpayers can avoid the excess contribution penalty by withdrawing the excess amount from the IRA. However, doing so may result in a federal early distribution penalty. Generally, a distribution paid to an individual under age 59 ½ will result in a 10% federal tax on the distribution.

    The amount of the Wisconsin excess contribution penalty is reported on line 37 of Form 1 or line 63 of Form 1NPR (line numbers based on 2013 forms). The 6% federal penalty (even though not actually paid) is entered in the space provided. This amount is then multiplied by .33 which results in the Wisconsin penalty that is included on line 37 of Form 1 or line 63 of Form 1NPR.

    Example: Using the facts in the example in Question 12, Taxpayer B has an excess contribution of $3,500. Taxpayer B would enter $210 ($3,500 x 6%) in space provided for the federal penalty by line 37 of Form 1. After multiplying the $210 by .33 ($210 x .33 = $69.30), Taxpayer B enters the Wisconsin penalty of $69.30 on line 37 of Form 1.

  14. What is the tax treatment of a traditional IRA that I inherited from my same-sex spouse?

    For federal tax purposes, special rules apply to an inherited IRA. If the beneficiary of a traditional IRA is the decedent's surviving spouse (including a same-sex spouse) who properly rolls over the distribution into another traditional IRA, the distribution is not currently taxed. A surviving spouse can also roll over tax free the taxable part of the distribution from other qualified plans including section 401(k) plans, section 403(b) plans, and section 457 plans.

    Because Wisconsin does not recognize a same-sex marriage, for Wisconsin tax purposes the special rules that apply to a surviving spouse do not apply to the surviving member of a same-sex couple. If a beneficiary receives a lump-sum distribution from a traditional IRA he or she inherited, all or some of it may be taxable. The distribution is taxable in the year received as income in respect of a decedent up to the decedent's taxable balance. This is the decedent's balance at the time of death, including unrealized appreciation and income accrued to date of death, minus any basis (nondeductible contributions). Amounts distributed that are more than the decedent's entire IRA balance at the time of death are also the income of the beneficiary.

  15. Do the required minimum distribution rules that apply to retirement accounts change when applied to a same-sex couple?

    For federal tax purposes, various tables are provided to determine the required minimum distribution. The amount of a required minimum distribution is the same for married persons (including those in a same-sex marriage) and unmarried persons with one exception. If the spouse of the owner of the account is the sole beneficiary and the spouse is more than 10 years younger than the owner, the required minimum distribution may be less.

    Because Wisconsin does not recognize a same-sex marriage, for Wisconsin tax purposes the owner of the account must determine the required minimum distribution as an unmarried person. If this is larger than the federal required minimum distribution, you may be subject to a Wisconsin penalty if this larger amount is not distributed.

    Wisconsin law imposes a penalty on 33% of the federal penalty for required minimum distributions. The federal penalty is 50% of the amount by which the required minimum distribution exceeds the actual distribution. Even though a penalty may not be imposed for federal tax purposes, if a required minimum distribution is not made for Wisconsin purposes, the Wisconsin penalty is equal to 16.5% of the amount not distributed (50% x 33% = 16.5%).

    The amount of the Wisconsin penalty is reported on line 37 of Form 1 or line 63 of Form 1NPR (line numbers based on 2013 forms). The 50% federal penalty (even though not actually paid) is entered in the space provided. This amount is then multiplied by .33 which results in the Wisconsin penalty that is included on line 37 of Form 1 or line 63 of Form 1NPR.

  16. What is the tax treatment if I use my health flexible spending account to pay medical expenses for my same-sex spouse?

    For federal tax purposes, an employer may provide a health flexible spending account (FSA) that is set up for the purpose of paying qualified medical expenses for the account holder, their spouse (including a same-sex spouse), and any dependents. The maximum amount that may be contributed to the FSA is $2,500 for 2013. The amount contributed to the FSA is considered a reduction in salary and is not subject to income tax.

    Because Wisconsin does not recognize a same-sex marriage, contributions to a FSA would not be deductible for Wisconsin tax purposes if the FSA provides benefits to a same-sex spouse that is not a dependent. Employers may not reduce the employee's taxable wages for Wisconsin for amounts contributed to the FSA.

    For example, if an employee designated $2,500 to a federal health FSA for 2013 that allows benefits to the employee's same-sex spouse, the entire $2,500 is included in the employee's taxable wages for Wisconsin.

  17. How do I determine my credit for tax paid to other states if I file a joint return in the other state?

    If only one member of a same-sex couple that resides in Wisconsin has income taxable to another state that is also taxable to Wisconsin, that member of the same-sex couple may be able to claim the credit for tax paid to another state on his or her Wisconsin return that is filed as single (or as head of household if qualified). The other member of the same-sex couple may not claim the credit. Complete Schedule OS, Credit for Net Tax Paid to Another State, to determine the amount of credit.

    If a same-sex couple that resides in Wisconsin filed a joint return in another state and both members of the same-sex couple had income taxable to that state and the same income was taxable to Wisconsin, each member of the same-sex couple may be able to claim a credit for tax paid to another state on their separate Wisconsin return filed as single (or head of household if qualified). Each member of the same-sex couple must complete a separate Schedule OS. Certain adjustments must be made when completing Schedule OS.

    • Part I of Schedule OS is for reporting income (and adjustments) taxable to the other state. Each member of the same-sex couple must complete Part I of their separate Schedule OS based on that member's separate income taxable to the other state.
    • Each member of the same-sex couple would complete lines 26 and 27 of Schedule OS based on their separate amounts taxable to both Wisconsin and the other state.
    • When completing line 28 of Schedule OS, the amount of tax from the joint income tax return of the other state is prorated for each member of the same-sex couple as follows:
      Income taxable to other state by the one member of the same-sex couple X Net tax paid to the other state = Amount to enter on line 28 of Schedule OS
      Total income taxable to other state by both members of the same-sex couple

    Example: Taxpayer 1 and Taxpayer 2 are a same-sex couple that reside in Wisconsin. Each taxpayer is required to file their Wisconsin return as single. The taxpayers file a joint return with another state to report income taxable to that state and pay net tax of $4,000 to that state. The income taxable to the other state is $20,000 of wages earned by Taxpayer 1 and $60,000 of wages earned by Taxpayer 2. The amount to be reported as net tax paid to the other state on line 28 of Schedule OS by Taxpayer 1 is $1,000 ($20,000 ÷ $80,000 x $4,000). The amount to be reported as net tax paid to the other state by Taxpayer 2 is $3,000 ($60,000 ÷ $80,000 x $4,000).

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Customer Service Bureau
P.O. Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2486
Fax: (608) 267-1030
Email Additional Questions

Last updated November 1, 2013