A landmark U.S. Supreme Court decision this year recognized that same-sex married couples have the right to receive certain federal benefits and tax filing considerations that go to all married couples under federal law.
The court ruled on June 26, 2013, that the Defense of Marriage Act (DOMA), which prohibited the federal government from recognizing same-sex marriages, was unconstitutional.
Additional clarification from the Internal Revenue Service also ensures that these federal laws apply if a couple was legally married in a state that recognizes same-sex marriages, even if they reside in a state that does not acknowledge the marriage.
Guidance for tax filing
The IRS also offered guidance on how to file current and prior year tax returns. For 2013 tax returns, couples must file as either married filing jointly or married filing separately. For 2012 returns (filed before September 16, 2013) and those subject to statutory limitations (typically three years from filing), couples have the option of filing as single individuals or married couples.
Same-sex couples to receive many federal benefits
The Supreme Court ruling provides many benefits to same-sex married couples including Social Security benefits, unlimited spousal exemption amount for gift and estate taxes, portability provision for estates, and more flexibility with Individual Retirement Accounts. For example, couples will be able to access beneficiary options and the availability of a spousal IRA. In addition, married couples selling a primary residence can exempt up to $500,000 in capital gains from taxes while individuals can only exempt $250,000.
Potential negative taxpayer implications of DOMA ruling
There are certain parts of the tax code that can have a negative impact on the financial situation of married couples.
Here are some tax code provisions to be mindful of:
For additional information on the new taxes associated with the health-care law, see the education piece, “Planning for the 3.8% Medicare investment surtax.” The impact of the Supreme Court ruling is important for married couples as they decide how to file taxes and conduct financial planning. It is important to work with a financial advisor or tax specialist to understand how the federal tax code may affect their specific situation.