NEW YORK (MainStreet) — When it comes to matters of federal taxes for same-sex couples, U.S. law now trumps all. The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have ruled that same-sex spouses who have been legally married will be treated as married in all states, for federal tax purposes. And the ruling applies regardless of whether or not couples now live in a local jurisdiction that recognizes same-sex marriages.
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"Today's ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide," said Treasury Secretary Jacob J. Lew. "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."
Same sex spouses will now have a married filing status for personal and dependency exemptions, the standard deduction, employee benefits, IRA contributions, income, gift, and estate taxes and claiming the earned income tax credit or child tax credit – any element in the matter of taxes where marriage is a factor.
The impact is far-reaching: any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, federal tax laws do not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state laws.
Legally-married same-sex couples generally must file their 2013 federal income tax return using either the "married filing jointly" or "married filing separately" filing status.
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The IRS says that 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, usually three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.
Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.
State tax laws are unaffected by the ruling. Homosexual married couples living in one of the 37 states that don't recognize same-sex marriages will still have to file any required state income tax returns as single individuals.
--Written by Hal M. Bundrick for MainStreet