How Will Same-Sex Marriage Affect Taxes?

The Supreme Court ruling in favor of same-sex marriage is a hot topic at the forefront of everyone’s minds.

 

How will the recent Supreme Court ruling in favor of same-sex marriage affect taxes? Does this ruling affect you?

 



Cathy A. Robinson, CPA
Senior Manager

Since the June 26^th ruling, individuals will see a change to tax filing requirements at the state level.  

 

Before the decision was made, same-sex couples were able to file joint returns at the federal level.  However, there was a catch to this method: most states did not recognize same-sex couples, and they were required to file individually or as head of household.

 

With the new ruling, there will be a streamlined process using the same filing status at the state returns. States will also begin to issue tax guidance on how same-sex couples can file their returns. In fact, Sen. Ron Wyden, a Democrat from Oregon and a member of the Senate Finance Committee, plans to introduce legislation this week that will provide gender neutrality for spouses. This bill will be called the Marriage Equality for All Taxpayers Act and would eliminate gender-specific references in the current tax code.

 

Tax guidelines are also expected to change to include treating all same-sex couples equally in regards to estate tax and other inheritance issues as married couples.

 

Under federal tax regulations, couples who live in states that currently do not recognize same-sex marriages will be now be able to:

·         Make unlimited gifts to one another without gift tax implications

·         Leave property to one another without survivor having to pay estate taxes

·         Leave IRA to surviving spouse as a "rollover" IRA

·         Be able to qualify as surviving spouse with Social Security benefits