Gay spouses in all U.S. states will be treated as married under federal tax law even if local authorities don’t recognize their marriages, in what gay-rights advocates are calling a victory.
The decision by the Treasury Department today implements the U.S. Supreme Court’s decision in June to overturn part of the federal Defense of Marriage Act, which had forbidden the Internal Revenue Service from letting married homosexual couples file joint tax returns.
The U.S. government’s decision is a win for same-sex couples who were married in one of the 13 states, the District of Columbia or foreign countries that recognize such relationships and now live in one of the 37 states that don’t.
“This is a very positive development,” said Derek Dorn, a partner at Davis & Harman LLP in Washington and outside counsel to the Human Rights Campaign, which advocates for lesbian and gay Americans. “Additional details need to be worked out in more nuanced areas of the tax law.”
More than 200 provisions in the tax code and federal regulations reference marriage, affecting a range of financial matters such as retirement accounts and health benefits, according to the IRS. Couples with unequal incomes will benefit from the marriage bonuses in the tax code, while those with relatively equal incomes will have to pay more.
The ruling also will make it easier for spouses to inherit money tax-free.
Amending Returns
There are more than 130,000 married, same-sex couples in the U.S., according to estimates from the 2010 Census. For tax year 2013, they must use the married filing jointly or married filing separately status. They have the option to amend returns filed as long as three years ago and can seek refunds; they aren’t required to refile returns if they would pay more.
For example, before the court’s ruling, same-sex spouses who received benefits from one of their employers had to consider the benefits’ value as taxable income for the spouse who doesn’t work for that employer. On an amended return, they could remove that from income and recalculate their tax liability.
read more at: http://www.bloomberg.com/news/gay-spouses
The decision by the Treasury Department today implements the U.S. Supreme Court’s decision in June to overturn part of the federal Defense of Marriage Act, which had forbidden the Internal Revenue Service from letting married homosexual couples file joint tax returns.
The U.S. government’s decision is a win for same-sex couples who were married in one of the 13 states, the District of Columbia or foreign countries that recognize such relationships and now live in one of the 37 states that don’t.
“This is a very positive development,” said Derek Dorn, a partner at Davis & Harman LLP in Washington and outside counsel to the Human Rights Campaign, which advocates for lesbian and gay Americans. “Additional details need to be worked out in more nuanced areas of the tax law.”
More than 200 provisions in the tax code and federal regulations reference marriage, affecting a range of financial matters such as retirement accounts and health benefits, according to the IRS. Couples with unequal incomes will benefit from the marriage bonuses in the tax code, while those with relatively equal incomes will have to pay more.
The ruling also will make it easier for spouses to inherit money tax-free.
Amending Returns
There are more than 130,000 married, same-sex couples in the U.S., according to estimates from the 2010 Census. For tax year 2013, they must use the married filing jointly or married filing separately status. They have the option to amend returns filed as long as three years ago and can seek refunds; they aren’t required to refile returns if they would pay more.
For example, before the court’s ruling, same-sex spouses who received benefits from one of their employers had to consider the benefits’ value as taxable income for the spouse who doesn’t work for that employer. On an amended return, they could remove that from income and recalculate their tax liability.
read more at: http://www.bloomberg.com/news/gay-spouses
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