This tax season marks the first time that same sex married couples can file as “married” on their federal return! There could be some benefits to filing this way – deductions or credits can now be claimed, but because of the so-called “marriage penalty,” you may wind up paying more. This new policy will simplify the process for preparing federal taxes, but it may boost some couple’s total tax liability. Couples who have been married in a state that recognized gay marriages before 2013 might want to revisit their prior returns to see if they should refile them.
New IRS policy (Federal):
- If you were legally married in any state (more on this part below) or foreign country by the last day of 2013, you are married for tax purposes.
- The rules apply only to couples who are legally married. The IRS does not consider domestic partnerships or civil unions to be marriages.
- For federal filing purposes, you will file as married, even if the state in which you live does not recognize same sex marriage.
IRS policy (State):
- Same-sex marriage is not legal in all states. If a gay couple got married in one state but live in or move to another that does not recognize their marriage, each spouse may have to file a “single” state income tax return.
- Each state gets to make up its own rules for filing state income taxes, and in some cases, those rules are still in flux. Some states have created new forms for same-sex couples to use if they file a joint federal return.
On December 16, the IRS released Notice 2014-1, providing additional guidance on administration of employee benefit plans and held that same-sex married couples will be treated as married under federal tax law. The new guidance consists of questions, answers and examples relating to elections and reimbursements under cafeteria plans, FSAs and HSAs. In some cases, you may need to request a new W-2 from your employer if you were impacted by these changes to the federal laws.
With this decision brings a number of changes, some of which may seem counter-intuitive or not obvious. With an ADPA on site, we are ready to work with you to help you navigate all the new rules and regulations.