Wednesday, September 4, 2013

IRS Announces Rules on Same-Sex Marriage

The IRS recently announced how it handle same-sex marriages as a result of the Supreme Court cases interpreting the Defense of Marriage Act.

Here are a few bullet points on the IRS position. Keep in mind that as with all IRS rules and regulations, this new pronouncement is a two edge sword. That is to say, you may have reporting errors if you don't follow the rules. Ironically, this aspect of the new position is truly Equal Opportunity and Equal Treatment - be careful of what you want as you might get it!

Here are the point:

1.   Under these new rules, same-sex marriages that are valid in the state where they were performed will be recognized for all federal tax purposes, even if the couple is domiciled in a state that does not recognize their marriage. 

2.   These rules apply to income taxes, estate and gift taxes and payroll taxes related to employee benefits.

3. Here is an example of "gotcha" from Uncle Sam - As a result, beginning with the 2013 tax year, legally married same-sex couples can no longer claim “unmarried” status on their federal tax returns. Instead, they must file joint or separate returns as married taxpayers.

4.    For prior tax years that are still open (generally 2010, 2011 and 2012), legally married same-sex couples can file amended joint or separate returns claiming “married” status, but they are not required to do so. 

5.   Couples who have not yet filed their 2012 returns have until September 15 to file as unmarried; beginning on September 16, they will have to file as married.

6.    The IRS will not recognize other state-recognized unions, such as domestic partnerships, as marriages for federal tax purposes, even if the couple is allowed to file a joint state tax return.

Hopefully this provides you some general guidance for your current filing status, as well as provides you with some additional planning information for the future. 

 Questions? Contact Tax Attorney Martin Cantu.