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U.S. Treasury recognizes Same Sex Marriage based on ‘Place of Celebration’

FINALLY – I.R.S. RECOGNIZES SAME-SEX MARRIAGES FOR TAX PURPOSES

While there have been many positive developments for the LGBT community since the Supreme Court issued its opinion in Windsor on June 26, 2013, I think the most notable is the U.S. Treasury’s press release of August 29, 2013.

There is no more uncertainty when it comes to married same-sex couples deciding whether to file a joint or single federal tax return. Nor is there discrimination based on whether the taxpayer resides in a recognition state (such as New York) or, a non-recognition state (such as Florida). The U.S. Treasury and I.R.S. will now treat same-sex married couples as married as long as they were married in a jurisdiction (U.S. or foreign country) that recognized their marriage. Click here to read the I.R.S. Revenue Ruling 2013-17 effective September 16, 2013.

During my recent speaking engagements and blogs I have stressed that with new rights also comes responsibility. It may or may not be beneficial for a legally married same-sex couple to file a joint married federal income tax return. Before deciding, I recommend you become an informed consumer by consulting with a certified public accountant to review your personal tax situation. Request that the accountant perform an analysis that compares the tax result if you file separate returns compared to the tax result of filing a joint return by looking at:

  • personal and dependent exemptions
  • employee benefits such as the purchase of same-sex spouse health insurance the premiums of which were deducted pre-tax
  • I.R.A. and 401k retirement plan contributions
  • child tax credit, and
  • earned income tax credit, just to name a few.

In addition, be sure to ask the accountant to review both spouses’ tax information and returns that were filed in the last three (3) years to determine whether you should amend those returns and/or request a credit or, refund. There is a three (3) year statute of limitation for filing a refund claim calculated from the date the return was filed or, two (2) years from when the tax was paid, whichever is later.

If you are not married to your life partner, having this important tax analysis done may help you to decide whether to get married. Even if you reside in a non-recognition state you are eligible for married benefits under federal tax laws. This is very important in the event you or your partner are relocated due to employment. Remember that these benefits are not available to same-sex couples who entered into a civil union or, domestic partnership agreement.

There are more revenue rulings expected concerning retroactive application of this new rule to employer sponsored benefits. Stay in close communication with your accountant and be sure to have a team of professionals working with you including an elder law attorney and a financial advisor.