The U.S. Depart­ment of the Trea­sury and the Inter­nal Rev­enue Ser­vice (IRS) have announced that same-sex cou­ples who are legal­ly mar­ried in juris­dic­tions that rec­og­nize same-sex mar­riage will be treat­ed as mar­ried for all fed­er­al tax pur­pos­es. Guid­ance has been pro­vid­ed in the form of a Rev­enue Rul­ing (Rev. Rul. 2013–17).  Here is a link to a New York Times arti­cle that pro­vides more infor­ma­tion regard­ing spe­cif­ic sce­nar­ios.

 

Guidance issued in response to recent Supreme Court decision

The Trea­sury Depart­ment and IRS guid­ance was issued in response to the recent Supreme Court case strik­ing down Sec­tion 3 of the Defense of Mar­riage Act of 1996 (DOMA), which defined mar­riage as the union of a man and a woman.

 

In gen­er­al though ….

State granting marriage is key, not state of residence

If a same-sex cou­ple is legal­ly mar­ried in a state that rec­og­nizes same-sex mar­riage, the cou­ple will be treat­ed as mar­ried for all fed­er­al tax pur­pos­es. This is true even if the cou­ple resides in a state that does not rec­og­nize same-sex mar­riage. So, a same-sex cou­ple legal­ly mar­ried in a state that rec­og­nizes same-sex mar­riage, but resid­ing in a state that does not rec­og­nize same-sex mar­riage, will be treat­ed as mar­ried for fed­er­al tax pur­pos­es even though it’s pos­si­ble the cou­ple may not be treat­ed as mar­ried for state tax pur­pos­es. Recog­ni­tion also applies to same-sex cou­ples legal­ly mar­ried in the Dis­trict of Colum­bia, a U.S. ter­ri­to­ry, or a for­eign coun­try.

Reg­is­tered domes­tic part­ner­ships, civ­il unions, and oth­er for­mal rela­tion­ships rec­og­nized under state law do not qualify–only cou­ples legal­ly mar­ried under state law will be treat­ed as mar­ried for fed­er­al tax pur­pos­es.

 

Applies for all federal tax purposes

Legal­ly mar­ried same-sex cou­ples are treat­ed as mar­ried for all fed­er­al tax pur­pos­es. This applies for fed­er­al estate and gift tax pur­pos­es, and for fed­er­al income tax pur­pos­es, includ­ing:

  • Fil­ing sta­tus issues
  • Per­son­al and depen­den­cy exemp­tions
  • Stan­dard deduc­tions
  • Employ­ee ben­e­fits
  • IRA con­tri­bu­tions and deduc­tions
  • The earned income tax cred­it (EITC)
  • The child tax cred­it

 

2013 tax year implications

If you are legal­ly mar­ried on the last day of the year, you gen­er­al­ly have to file your 2013 fed­er­al income tax return as a mar­ried indi­vid­ual. That means same-sex cou­ples treat­ed as mar­ried for fed­er­al income tax pur­pos­es will gen­er­al­ly have to choose whether to file their 2013 fed­er­al income tax return as mar­ried fil­ing joint­ly, or as mar­ried fil­ing sep­a­rate­ly.

 

Prior tax years

If you were mar­ried pri­or to 2013, you may also amend pri­or year fed­er­al income tax returns, choos­ing to be treat­ed as mar­ried for fed­er­al income tax pur­pos­es (assum­ing that you were legal­ly mar­ried on the last day of the tax year(s) being amend­ed). You’re only able to file an amend­ed return, how­ev­er, for any tax year still open under the statute of lim­i­ta­tions. Gen­er­al­ly, the statute of lim­i­ta­tions for fil­ing a refund claim is three years from the date a return was filed, or two years from the date tax was paid, whichev­er is lat­er. For most indi­vid­u­als, that means claims can still gen­er­al­ly be filed for tax years 2010, 2011, and 2012. You are not required to amend a pri­or year return, how­ev­er.

It’s impor­tant to note that if you choose to amend a pri­or year fed­er­al income tax return in order to be treat­ed as mar­ried, all items on the return must be adjust­ed to con­sis­tent­ly reflect your mar­i­tal sta­tus (i.e., mar­ried fil­ing joint­ly or mar­ried fil­ing sep­a­rate­ly). That is, if you amend a pri­or year tax return to be treat­ed as mar­ried, you are treat­ed as mar­ried for all items and issues relat­ed to the return.

Note: If your employ­er pro­vid­ed health cov­er­age for your same-sex spouse and includ­ed the val­ue of that cov­er­age in your adjust­ed gross income (AGI), amend­ing your pri­or year return to reflect your sta­tus as a mar­ried indi­vid­ual may allow you to recov­er the income tax­es paid on the val­ue of this cov­er­age. Sim­i­lar­ly, if you paid pre­mi­ums for health-care cov­er­age for your same-sex spouse with after-tax dol­lars, you may be able to reduce your income by these pre­mi­um amounts.

Note: For tax year 2012, same-sex spous­es who filed their fed­er­al income tax returns before Sep­tem­ber 16, 2013 (the effec­tive date of the Rev­enue Rul­ing) may choose–but are not required–to amend their 2012 fed­er­al income tax returns to file as mar­ried (i.e., mar­ried fil­ing joint­ly or mar­ried fil­ing sep­a­rate­ly). Same-sex spous­es who file an orig­i­nal fed­er­al income tax return for the 2012 tax year (or for any pri­or tax year, for that mat­ter) on or after Sep­tem­ber 16, 2013, will not have a choice–if legal­ly mar­ried for the tax year, they will gen­er­al­ly have to file their fed­er­al income tax return as mar­ried fil­ing joint­ly or mar­ried fil­ing sep­a­rate­ly.