Married same-sex couples gain equal tax benefits

Written By limadu on Jumat, 30 Agustus 2013 | 08.36

edie windsor supreme court

Edie Windsor took her tax dispute to the Supreme Court and won a landmark ruling in June.

NEW YORK (CNNMoney)

The decision has a host of implications, even for same-sex married couples who now live in states that don't recognize same-sex marriage.

It affects how they will be treated in terms of federal income taxes, federal estate and gift taxes, the tax breaks they get for employer-sponsored health insurance and other benefits.

(Full coverage of LGBT financial issues)

The ruling applies to any same-sex couple legally married in any state, the District of Columbia, a U.S. territory or foreign country. It does not apply to registered domestic partnerships, civil unions or other formal relationships recognized under state laws.

Currently 13 states and D.C. have legalized same-sex marriage as have 15 other countries, including the Netherlands, Belgium, Spain, Canada, Sweden, South Africa and Brazil.

(Related: Experts answer same-sex marriage questions)

"Today's ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide," Treasury Secretary Jack Lew said in a statement. "It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve."

Practically speaking, in terms of filing their 2013 federal taxes, legally married same-sex couples must choose to file either as "married filing jointly" or "married filing separately."

They may also choose to file an amended return as a married couple and a refund claim for tax years 2010, 2011 and 2012.

(Map: Where same-sex marriage is legal)

In terms of health insurance, until now money used to buy same-sex spousal coverage in an employer-sponsored plan was subject to income tax. Now, as a result of Treasury's ruling, that money will be treated as tax free for federal income tax purposes. And the participating employee can file a refund claim for the income taxes paid on those spousal coverage premiums.

The federal estate tax will also offer more favorable treatment. Same-sex surviving spouses will now be entitled to inherit the estate of their late husband or wife tax-free.

But it may not be all good news and savings.

Some legally married same-sex couples, like their opposite-sex counterparts, will find themselves subject to the notorious marriage penalty. That refers to situations where a married couple ends up with a higher tax bill as a result of filing jointly than when they filed as single people making the same income.

(For more information, here's an IRS FAQ on the same sex marriage ruling.) To top of page

First Published: August 29, 2013: 2:47 PM ET


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