The IRS has announced that it will treat all legally married same-sex couples as married for federal tax purposes, even if the couple lives in a state that does not allow same-sex marriage. This follows the Supreme Court ruling that struck down the federal Defense of Marriage Act in June, 2013.
The IRS is taking a "place of celebration" approach (as opposed to "place of domicile") to determine tax status as it applies to all federal taxes, including income tax, estate and gift taxes, payroll taxes related to spousal benefits, and others.
The ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized in some states. The couple must be legally married in one of the 50 states, the District of Columbia, a U.S. territory or foreign country that recognizes same-sex marriage. State tax obligations remain the jurisdiction of the individual states and must be dealt with separately.
Starting with the 2013 tax year, legally married same-sex couples must file as married filing jointly or married filing separately. They have an option to file an amended return to reflect their married status for tax years 2010-2012. Married same-sex taxpayers who have filed an extension also have the option to file 2012 taxes as an unmarried taxpayer until September 16, 2013.
Employers must be ready to deal with extensive changes in the treatment of same-sex couples. Withholding, pre-tax and after-tax benefits, and any retroactive benefits that may be available will have to be examined and a determination made. Individuals claiming tax credits and other benefits under the Patient Protection and Affordable Care Act may also be impacted by IRS recognition of same-sex marriage.
Same-sex couples are strongly advised to obtain guidance from a professional tax advisor. We will continue to follow this topic throughout the remainder of the year. If you have any questions about same-sex marriage tax issues, or any other tax topic, please contact Gray, Gray & Gray's Tax Department at (781) 407-0300.
