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DOMA Creates Tax Benefit Possibilities

September 11th, 2013 by Associate

There’s a lot of discussion around the Supreme Court’s recent ruling in the Defense of Marriage Act (DOMA) and the tax impact it will create.  Many questions remained unanswered until Revenue Ruling 2013-17 was issued on Thursday, August 29, 2013.  The main concern was the issue of being married in a state that recognizes same-sex marriages and moving to a state that doesn’t.  To the relief of many, the Revenue Ruling allows for same-sex couples to be treated as married for federal income tax purposes, gift tax, and estate tax, regardless if they move to a state that doesn’t recognize their marriage.

If you are a same-sex married couple for all legal purposes, the wealth of benefits available to you have recently increased.  Some of the available benefits include the following:

  • Social Security survivor’s and spousal benefits
  • Certain veterans benefits, such as pensions and survivor’s benefits
  • Lifetime gift tax-free property transfers to spouses
  • Estate tax relief for surviving spouses
  • Military spousal benefits
  • Family medical leave rights
  • Spousal IRA contributions
  • Spousal visas for foreign national spouses
  • Joint filing of federal income taxes
  • Private pension benefit options (e.g., survivor annuities)
  • Employer health-care benefits may be received on a pretax basis

This opens the door for a great deal of tax and estate planning to same-sex married couples.  If your situation falls under these recent changes, you do have the option to amend prior year returns and possibly collect a refund.   As a result of this ruling, the IRS will have to process several amended returns filing for refund claims, so why not be one of them?  That being said, along with these recent rulings comes increased tax complications.

If you’d like to discuss this topic more, please contact your tax advisor at GBQ.

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