Same-Sex Marriages Recognized for Federal Tax Purposes

Same-Sex Marriages Recognized for Federal Tax Purposes
Eileen St. Pierre, The Everyday Financial Planner

Responding to the Supreme Court’s June 26 decision regarding the 1996 Defense of Marriage Act (DOMA), the Internal Revenue Service (IRS) announced yesterday that all legal same-sex marriages will be recognized for federal tax purposes regardless of where the couple lives. The ruling does not apply to domestic partnerships or civil unions. It takes effect on September 16.

Implications

This ruling means these couples can file joint tax returns. Depending on when the marriage took place, the couple can also file amended returns (Form 1040X) for up to three prior tax years.

  • Filing amended returns is strictly voluntarily – it is not required.
  • For example, if the couple legally married last year, they can file an amended 2012 return as married filing jointly or married filing separately.

They will also be considered married for federal gift and estate tax purposes.

  • Same-sex spouses will be entitled to the spousal estate tax exemption.
  • File Form 843 if you wish to claim a refund for gift or estate taxes.

Walmart, the nation’s largest employer, recently announced it will offer health insurance and other benefits to same-sex couples. Before the IRS ruling, employees who purchased same-sex health insurance coverage from their employers were not able to deduct their premiums from their income. Now they can.

State Income Tax

What if you live in a state that has an income tax but does not recognized your same-sex marriage? You will still have to file an individual (single) state income tax return.

Other Federal Benefits

The IRS was the first big federal agency to issue rulings responding to the Supreme Court’s decision on DOMA. Expect more rulings to come soon. Of particular interest will be rulings affecting Social Security and Veteran’s benefits.

Update:  On September 4, the Obama Administration announced that legally married same-sex couples will now be entitled to veteran’s benefits.

Visit my Taxes page for more information.