• South Carolina: Department Of Revenue Says Same-Sex Married Couples Must File Separate Tax Returns
  • January 14, 2014 | Authors: David M. Kall; Susan Millradt McGlone
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • On Jan. 2, 2014, the South Carolina Department of Revenue (the Department) issued S.C. Revenue Ruling No 13-Draft/1/2/14 (the Ruling). In the Ruling, the Department addressed how individuals in a same-sex marriage recognized by the IRS must file their South Carolina income tax returns.

    South Carolina joins an increasing majority of states that have issued guidance—that same-sex married couples must file separately. The Department noted that South Carolina does not recognize same-sex marriage on both constitutional and statutory grounds. So while South Carolina law requires in most instances that heterosexual married couples file using the same status as such couple used in filing their federal tax return(s), this does not apply to same-sex married couples filing income tax returns in South Carolina because the state does not recognize their marriage.

    The Department gave the following directions to same-sex married couples who filed jointly for federal income tax purposes when filing their income tax returns in South Carolina:

    • Each individual must file a separate South Carolina income tax return using Form SC 1040
    • Each individual must claim a status of single, or, if qualified, head of household
    • To prepare Form SC 1040, each individual must first prepare a “separate” federal income tax return for South Carolina purposes only (pro forma federal income tax return) using a filing status of single or head of household (if qualified) and complete it as though the individual is not married

    The Ruling indicates that further guidance on filing 2013 income tax returns will be posted on the Department’s website in the near future.

    The Multistate Tax Update will continue to follow developments in the wake of the U.S. Supreme Court’s ruling in United States v. Windsor, as well as Revenue Ruling 2013-17 (holding, in part, that: (1) “husband” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage; and (2) a marriage of same-sex individuals that was validly entered into in a state whose law authorizes the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages). These holdings have only begun their ripple effect throughout the United States at both the federal and state levels. To be sure, a multitude of state legislation, rulings, guidance, and litigation will continue to ensue as a result.