June 15, 2015

Denver Tax Attorney   Tax Filing Tips for Same Sex CouplesWith same-sex marriage considered legal in the eyes of federal government, same-sex couples are now able to file joint tax returns – even if they live in a state where their marriage is not recognized. For tax purposes, all marriages are seen as equal. Like all other tax matters, however, this form of equality may either work in their favor or make things worse.

When filing taxes, these are some factors same-sex couples should take into consideration:

Joint return status

Since the Defense of Marriage Act was repealed, the most significant tax-related change is that same sex-couples can now file tax returns jointly. Filing jointly is particularly beneficial for couples with a substantial difference in their incomes. Couples with similar incomes may not benefit much, or may not benefit at all.

Amending returns

Same-sex couples that have been married for a few years may want to consider amending tax returns of the previous year. If you were married legally in 2012, you may file amended returns jointly and potentially earn a refund for doing so. The deadline for amending a 2012 return is April 15, 2016.

Social security

If you live in a state that recognizes same-sex marriages, the Social Security Administration now pays benefits to your same-sex spouse. However, the SSA advises same-sex claimants to not delay filing for such benefits regardless of where they live, as they are aiming to change the rules and eventually make payments retroactively based on when they were applied for.

Tax-free employment benefits

Until recently, health insurance covered by an employer for a same-sex spouse would be considered a taxable financial benefit. At present, however, the IRS sees a same-sex spouse as any other spouse. This means that you will no longer be taxed on health insurance, flexible spending accounts, or any other employee-sponsored benefit plans.

Gift and estate taxes

Like other married individuals, same-sex spouses are now entitled to make unlimited gifts to each other while alive without any estate or gift tax consequences. If a spouse dies, the surviving spouse may be left with an unlimited amount of money—free of federal estate tax.

Mortgage interest

Same-sex partners can divide the mortgage interest deduction, provided that both names are on the mortgage being paid. The same-sex couple does not have to be married.

Other deductions

If you and your same-sex spouse were married in the tax year 2014 and beyond, you may be entitled to deductions on some of your wedding expenses. This includes a deduction if your wedding was held at a church, state park, or historical location. If leftover flowers and wedding decorations were donated, you may also enjoy additional deductions.

For members of same-sex couples who have entered into civil unions, domestic partnerships, or other types of formal relationships recognized under state law—but not considered marriages—the IRS still considers them unmarried for federal tax purposes. They must file using single status or in some instances, head of household status.

As with all tax-related matters, certain tax scenarios can be more complex than others. Same-sex couples, like other couples, should always consider seeking guidance from a tax professional—especially if they reside in a state that does not recognize same-sex marriages.

 

Categories: Blog, Taxpayers' Rights