DOMA and tax filings

[mwcpa]

While the IRS has not offered guidance (as of 7-6-13), those who are in one of the 13 states and the District of Columbia that are in a same sex marriage should consider reviewing their federal income tax filings filed within the last 3 years and consider filing an amendment.

Under DOMA, same sex couples were not able to file a federal income tax return using a "married" status, now one can.

Under DOMA, certain employee benefits, such as spousal health care coverage, were taxable under federal law to a same sex couple.  Now, it is not.

Under DOMA, same sex couples were not afforded the same treatment under the federal gift and estate tax law related to transfer between spouses.  Now they are.

There could be significant tax dollars at play here for those in same sex marriages. 

I strongly suggest that you see your tax professional immediately to review.

[Deleted]

Mmmmm, if many people do that, the IRS will be very busy in the next 5 months. 

[mwcpa]

gin... and the IRS was given a 25% budget cut (proposed)...
It may be a mess....

generally, if the individuals were married they MUST file as MFJ or MFS.... you cannot opt to be single...

And, with a taxable estate, milllions could be owed to spousal beneficiaries who were denied rights protected by the constition, no matter how you feel about "gay" marriage... there was a time when it was not legal for mixed races to marry... we seemed to have lived through that "oh my G-d" moment....

[taxref]

I filed 1 same sex couple return for 2012.  Of course, we had to file married for the state and single for the feds.  I am awaiting the guidance on this.

[chiver78]

Jul 10, 2013 17:28:50 GMT -5 mwcpa said:

And, with a taxable estate, milllions could be owed to spousal beneficiaries who were denied rights protected by the constition, no matter how you feel about "gay" marriage... there was a time when it was not legal for mixed races to marry... we seemed to have lived through that "oh my G-d" moment....

and that's exactly what started the ball rolling - United States v. Windsor.

[mwcpa]

ref..... I would venture to guess that an amendment is in order.... DOMA is unconstitutional per the right leaning Supreme Court.... and if you are considered legally married in a state then you are married for federal tax purposes.... I have already reached out to some of my same sex couple clients suggesting we get protective refund claims states (especially for 2009 if an extension was filed... remember a refund claim can generally be filed within 3 years of timely filing the original return or extended filing... it is possible that some 2009 filings are still "open" for this purpose.. )

Also, if spouse A covered the health insurance of spouse B, for New York purposes (where I am) the cost of the insurance was taxable for federal purposes but tax exempt under New York law.

[taxref]

My clients are also in NYC, but an amendment will only be for last year.  They were married in 2012, so all of their previous returns were not affected by the court ruling.

Edited for spelling.

[whoisjohngalt]

I wonder if they are now required to amend.

[mwcpa]

"I wonder if they are now required to amend."

I believe that is the exact issue that IRS is looking to get guidance on from the DOJ and Treasury Department from.

Generally, one would think that since they are "married" that the filing of a tax return as single would be incorrect. 

As DOMA was considered unconstitutional on a number of issues how far back can one go? (generally refund claims can be made within 3 years of a timely tax filing for a refund or 2 years after payment for others)
What if one was legally married in State A or Country B but now reside in State C where it is not legal?  (are you married for federal tax purposes and single for state?)
Who will pay for the cost of amending past filings.... I smell class action lawsuit to recover the costs.
Many issues to be resolved....

I have a client who got married in 2013 and now we need to rethink the planning we have done to minimize his overall tax.  And another contacted me the other day to ask if we got married what changes tax wise.  Same sex couples now have to deal with the same marriage penalty/bonus that opposite sex married couples have had to endure/benefit from for years.

tax ref.... be sure to look out for the "employee" benefits that were taxable for federal purposes but backed out for NY purposes, such as spousal health coverage.