UPDATED: Equality Illinois released a statement regarding the Illinois Department of Revenue's decision on state tax returns. See below.
Illinois couples in civil unions will now be required to file their state tax returns in the same way as married couples.
The Illinois Department of Revenue had decided that such couples would have to file separately because they could not file their federal taxes together. Sue Hofer, spokesperson for the Illinois Department of Revenue, said the agency looked to New York, which legalized same sex marriage this year, when trying to find a way to allow couples in civil unions to file joint state taxes.
Hofer said partners in a civil union would fill out the federal form as if they were married, and then fill out the state form as a married couple. The federal return would be sent only to the state, along with the state form, to be used as a dummy to base the state return upon. Those in civil unions would still have to file separate federal returns as single because the federal government does not recognize their partnerships. Couples who do not wish to file a joint return would still file as married but would be able to file separate state returns.
Hofer said joint filing for state taxes will not result in large tax benefits for couples -- the substantial benefit comes at the federal level for couples with disparate incomes. If one person has a much smaller income, it can move the household into a lower tax bracket than the individual was in. “In Illinois because we are a flat tax state, you really aren’t going to see any significant change to your taxes. … With the state, everybody pays a 5 percent flat tax. But there will be some benefits.” She said that exemptions such as for property taxes or education expenses, could be applied a couple’s total income instead of just an individual’s earnings.
Randy Hannig, director of public policy for Equality Illinois, declined to comment specifically on the change because he said the group had not received an official announcement from the department. However, he said he is “cautiously optimistic.” UPDATE: From a prepared statement released by Equality Illinois Monday night: "Since the beginning of June when same-sex couples first started entering into civil unions, no one could speak with certainty about how this new status would affect state tax policy," said Hannig. "We immediately reached out to the Illinois Department of Revenue and started the process of figuring out a solid solution to this problem. Illinois law specifies that couples in a civil union are afforded the same rights and benefits as married spouses, so why should same-sex couples' state tax status be any different?” Illinois is the 10th state, including the District of Columbia, to allow same sex couples to file joint tax returns, according to Equality Illinois.
Hofer said the department will work in the coming weeks to get the word out about the change so couples in civil unions know what to do when filing their returns early next year. “We realize we had to make a decisions before the end of the year,” she said. “We will be talking with advocates and folks that this will impact.”
Rep. Greg Harris, a sponsor of the law that legalized civil unions in the state, said he did not know whether the department had created a final policy on the issue. “I do know in having talked to tax partners in a number of major law firms ... that this change would bring us in line with what other states do,” Harris said. He said the problems the department had in sorting out tax policy for couples in civil unions highlight a disparity that exists at the federal level. Harris, a Chicago Democrat, said because the federal government does not recognize civil unions, couples will miss out on tax benefits and have to jump through “additional hoops” to file state taxes together. “There’s still an inequality in the way relationships between same sex couples are treated and the way relationships between opposite sex couples are treated.”
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