IRS to recognize same-sex marriage for federal tax purposes

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WASHINGTON – On Aug. 29, in light of the June 26, 2013 U.S. Supreme Court decision to invalidate a key provision of the 1996 Defense of Marriage Act, the U.S. Department of the Treasury ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes.

The ruling applies whether the couple resides in a jurisdiction that recognizes same-sex marriage or not.

jacob lewIn a press release announcing the ruling, U.S. Treasury Secretary Jacob J. Lew (r) stated, “Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide. It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve. This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”

The ruling allows same-sex couples to be treated as married for all federal tax purposes and applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking standard deductions, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

All same-sex marriages legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or even a foreign country will be covered by the ruling.

However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

Legally married same-sex couples will be required to file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.

According to the new rules, individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.

The Treasury and IRS intend to issue streamlined procedures for employers to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses.

Guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this revenue ruling are also expected.

The IRS refers domestic partners who live in one of the nine community property states, including Arizona, to Publication 555, Community Property.

Although the IRS will begin applying the new rules on Sept. 16, 2013, taxpayers who wish to apply the terms of the ruling to earlier periods may do so, so long as the statue of limitations for the earlier period has not expired.

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