Archive | Gay marriage

IRS says, “If you’re married, you’re married: gay or straight, in any state.”

At last, a little clarity on tax filings for same-sex couples who get married: the IRS has announced, as The Washington Post reports that married same-sex couples should file as married couples — whether or not they live in a state that recognizes gay unions.

That means that if you’re gay and married, you can file for federal tax purposes as “Married Filing Jointly” or “Married Filing Separately”, but not as “Single.”

However, if you are in a state that does not recognize gay marriage, you may have to file as Single on your state return.

You still don’t get to file as a married couple at the federal level if you are in a civil union or a registered domestic partnership, as The New York Times points out.

Supreme court’s gay marriage ruling leaves many tax questions unanswered

The Supreme Court’s 5-4 ruling that the Defense of Marriage Act is unconstitutional was trumpeted as a great step toward equal treatment for gay couples. But the ruling leaves many questions about tax filings for same-sex couples unanswered.

What we know: This is the easy part. Married same-sex couples living in the state where they married will be able to file their 2013 returns as “Married Filing Jointly” or “Married Filing Separately.” States currently allowing same-sex marriage are California, Connecticut, Delaware, the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington.

What we don’t know: This is a much longer list. For starters:

What about same-sex couples who marry in a state that recognizes gay marriage but then move to a state that does not? Will they be recognized as married for purposes of filing their federal returns while filing as single (unmarried) at the state level?

What about couples who are registered domestic partners (RDPs) or engaged in civil unions? Are they treated as single for federal tax purposes, or will the IRS go in the direction of a case in Illinois, in which the Chief Counsel’s office said that a couple engaged in a civil union could file a joint federal return?

What about previous years? Will the IRS require same-sex couple who were married prior to 2013 to amend their returns filing as married individuals? Will it merely give them the option of amending? Will it tell them that they cannot amend those returns?

The IRS may also need to address potential payroll tax refunds for companies that paid the taxes on health insurance for employees’ same-sex spouses, which isn’t taxable for married couples.

Hopefully, the IRS will issue guidance and these and other issues well before the 2013 tax filing season begins. C’mon, IRS–help us out here!!

Corporations say DOMA is a big tax hassle

I always say that everything’s about taxes. The current legal wrangling about gay marriage proves it once again.

More than 200 companies have signed onto a brief filed with the Supreme Court saying that the Defense of Marriage Act has become an administrative hassle, forces them to discriminate against different classes of married employees, and should be overturned so that same-sex couples receive federal recognition.

I’ve written previously about United States v. Windsor, which the Court is likely to hear in March. Ms Windsor was married to Thea Spyer and inherited Spyer’s property in 2009, but also was hit with a large estate tax bill that would not have been assessed if She had be a He. Companies including Apple, Nike, Starbucks, Marriott International and Walt Disney, filed in support of Ms Windsor’s case.

As Erik Eckholm wrote in The New York Times in summarizing the brief’s argument, “Treating heterosexual and same-sex married employees differently under federal law, the brief said, imposed high administrative costs as companies maintained dual systems of tax withholding and payroll. It results in extra tax burdens for both companies and employees with health plans, and can affect payments including retirement, pension and life insurance as well as having a bad effect on morale.”

Gay marriage at the Supreme Court: Taxes, as usual, are the key to everything

Edith Windsor saw the federal government claim more than $360,000 in taxes on the assets she inherited from her spouse’s estate when her spouse died in 2009. How could that be, when you are allowed to inherit an unlimited amount from a spouse free of estate tax?

Edith’s spouse was a woman. She and Thea Spyer had been together for more than 40 years, and got married in Canada in 2007.

Gay marriages, registered domestic partnerships, and other same-sex unions do not get equal tax treatment when compared to heterosexual marriages. The contortions of tax preparation caused by the fact that same-sex couples are treated differently for federal and state tax purposes are phenomenal. As the Windsor case shows, the differences can also be remarkably expensive.

The 83-year-old Ms Windsor is going to get her day in court–the Supreme Court–early next year. The Court is going to hear her federal suit challenging the Defense of Marriage Act. The Second Circuit Court of Appeals has said the law is unconstitutional.

“I think we’ll win if there’s justice, meaning they read the briefs and pay attention to the content,” Windsor told The New York Times. “But if it doesn’t happen this time, it will happen next time or the next. But it will happen.”

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