BPM
Search

IRS Recognizes All Legal Same-Sex Marriages for Federal Tax Purposes

09.26.13

Change actually came fairly quickly this time around. It only took two months from June 26 to August 29.

June 26 was the date that the Supreme Court invalidated a key provision in the 1996 Defense of Marriage Act, allowing same-sex couples to be treated as married for all federal tax purposes, including income and gift and estate taxes.

On August 29, the and it will go into effect for 2013 taxes.

This ruling impacts more than 130,000 same-sex married couples, according to estimates in the 2010 US Census.

There will be some confusion first time around mainly on the state side of things. States will have to decide how marriage affects the definition of income. How will health benefits to same-sex spouses now be treated? In the past health benefits were considered taxable income. And, now that this information won’t be on W-2 that companies submit to the federal government, will states have to tell businesses to keep reporting this to them?

In addition, 24 states still don’t recognize same-sex marriage, yet they use the same definitions of income as the federal government. And, in many states couples may have to file separate returns, which may be at odds with the state constitution. Some of these states require taxpayers to use the same state and federal filing status.

Wisconsin already made a change, as they are issuing a new tax form “Schedule S: Allocation of Income to be Reported by Same-Sex Couples Filing a Joint Federal Return.”

Other states are looking into finding a solution.

Another interesting twist is the September 16, 2013 marker. From this date going forward all same-sex married couples must file their returns using a married status: married filing jointly, married filing separately, or in certain circumstances as head of household. However, if you have extended your return and haven’t filed yet, you can choose to file as married or single. It’s your choice. And, you can file for a refund for 2010, 2011, and 2012.

In the short-term this may cost more and add complexity for some states to reconcile, however in the long-term this could lead to simplifying state tax codes.

For more information on the new IRS rules, check out the .