Federal Tax Changes for Same Sex Marriage

The IRS has responded with a general rule recognizing same-sex marriages nationwide.

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The Supreme Court’s ruling on parts of the Defense of Marriage Act (DOMA) also prompted the IRS to make some decisions regarding the taxation of same-sex couples. The IRS has responded with a general rule recognizing same-sex marriages nationwide. All couples who marry in a state (or other jurisdiction) that recognizes same-sex marriage will be treated as married for all federal tax purposes, even if they currently reside in a state that does not recognize same-sex marriage. The IRS position is consistent with the view they’ve taken on common law marriages for over 50 years. The IRS is not recognizing registered domestic partners, individuals in a civil union, or similar relationships as married. Persons in these relationships may not file as married filing jointly or married filing separately because the individuals are not married or are spouses for federal tax purposes.

Legally married same-sex couples must file as married filing jointly or married filing separately for tax year 2013. They have the option of amending returns from earlier years, but are not required to do so, provided the period of limitations for amending the return has not expired. Couples with higher incomes will want to consider amending earlier returns carefully. The marital tax penalty still exists for couples of all genders who earn a combined amount of more than $146,400 a year.

Legally married couples should have tax projections prepared to make sure their current tax withholding or estimated tax payments are still correct. The IRS has provided employers with two optional alternative special administrative procedures to use to correct overpayments of employment taxes. Upper income taxpayers will need to verify they are paying in enough to avoid underpayment penalties.

A final consideration for same-sex couples who reside in a state not recognizing their marriage – be prepared to file a joint federal return and a single state tax return. This will be more complicated in states which use the federal return as a basis for taxation.

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