A Doubly Trying Tax Season for Same-Sex Couples

FOR Colette Hayward and Margaret Selby, the problem is this: Maryland recognizes their 2009 marriage, but the federal government does not.

The ramifications are maddeningly complex, no more so than when they deal with the Internal Revenue Service. Two years after taking legal action to assert their rights as a married couple, they are paying a price when they pay their taxes.

For Ms. Hayward, 47, a lawyer who owns two construction businesses, and Ms. Selby, 48, a Baltimore County police officer, a big issue involves insurance benefits they fought to achieve. They are paying taxes on those benefits, even though such benefits for spouses normally are not taxed.

For same-sex couples across the United States, an offshoot of being married is a dizzying set of complications in computing taxes. Although nine states and the District of Columbia have approved same-sex marriages — two others recognize marriages conducted elsewhere — the federal 1996 Defense of Marriage Act prohibits such unions from being recognized by the federal government.

Ms. Hayward, 47, and Ms. Selby, 48, have two children and three grandchildren. They were together for 18 years before they married in Massachusetts. Soon after their marriage in 2009, Ms. Selby filed a request with the Baltimore County Police Department to add Ms. Hayward to her health care coverage and to make sure she was eligible for other benefits available to officer’s spouses. She was turned down.

Lambda Legal, the gay, bisexual and transgender advocacy organization, filed an administrative grievance, arguing that denying benefits to a married couple, gay or straight, was contrary to Maryland law. It cited a 2010 opinion by the Maryland attorney general, Douglas F. Gansler, which noted the state’s longstanding law recognizing out-of-state marriages, including same-sex ones.

In 2011, an arbitrator ruled in the couple’s favor. But the victory came with a catch. Generally, health insurance benefits are not taxable, and adding a spouse or child to an insurance policy has no tax consequences. But because of DOMA, their insurance is treated not as a spousal benefit, but as imputed income, and thus subject to federal income tax. Ms. Hayward said Baltimore County told the couple that adding her to the policy increased the cost of the insurance by about $8,000 a year. She figures that it will increase their overall tax bill by about $2,500 to $3,000.

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