WASHINGTON—Married same-sex couples will be treated just like their heterosexual counterparts for federal tax purposes no matter where they eventually live, said federal officials detailing implications of a recent Supreme Court decision on gay marriage.
Under Thursday's ruling, same-sex couples will be treated as married for federal tax purposes, including income as well as gift and estate taxes, the Treasury said. That covers couples who marry in one state and move to another that doesn't recognize their union.As a result, lawfully married same-sex couples no longer have to declare themselves unmarried on federal income-tax returns. Same-sex spouses won't have to pay tax on health-insurance benefits they received through a spouse, an item that cost the average same-sex couple over $1,000 a year in extra tax, according to the Human Rights Campaign, a gay-rights group. The change could be especially significant for estate taxes, where spouses enjoy big advantages.
Thursday's ruling spelled out the tax implications of the Supreme Court decision in June that invalidated parts of the Defense of Marriage Act. That legislation had sought to deny federal recognition of same-sex marriages, including through the tax code. It was praised by gay-marriage advocates, who say same-sex couples have been unfairly penalized by federal tax rules.
"Today's ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide," said Treasury Secretary Jacob J. Lew. "This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change." The Supreme Court's DOMA decision put the Treasury and IRS in a difficult spot, because the government typically has used a residency standard to determine whether taxpayers are married for federal tax purposes.
Treasury officials say they concluded the best approach was to treat legally married same-sex couples the same, no matter where they live. Making a married couple's filing status dependent on the law in their state of residence would have been difficult to administer, a senior Treasury official said. The official said the government chose the same course several decades ago in deciding to recognize so-called common-law marriages regardless of where the couple lived subsequently.
Some conservatives said Thursday's ruling opens the door to lawsuits by same-sex couples, arguing that a state's tax laws are unfair.Some legal experts say this ruling today could encourage and strengthen challenges to state laws forbidding gay marriage or penalizing same-sex couples in their tax filings.
"It's interpreting the law in a way that will guarantee further court action," said Brian Brown, president of the National Organization for Marriage. "It's like they're almost intentionally trying to create a mess…People will say they are being treated differently in states that don't recognize [same-sex marriage]."
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling doesn't apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
SOURCE : http://online.wsj.com/article/SB10001424127887324009304579043082275607214.html
Under Thursday's ruling, same-sex couples will be treated as married for federal tax purposes, including income as well as gift and estate taxes, the Treasury said. That covers couples who marry in one state and move to another that doesn't recognize their union.As a result, lawfully married same-sex couples no longer have to declare themselves unmarried on federal income-tax returns. Same-sex spouses won't have to pay tax on health-insurance benefits they received through a spouse, an item that cost the average same-sex couple over $1,000 a year in extra tax, according to the Human Rights Campaign, a gay-rights group. The change could be especially significant for estate taxes, where spouses enjoy big advantages.
Thursday's ruling spelled out the tax implications of the Supreme Court decision in June that invalidated parts of the Defense of Marriage Act. That legislation had sought to deny federal recognition of same-sex marriages, including through the tax code. It was praised by gay-marriage advocates, who say same-sex couples have been unfairly penalized by federal tax rules.
"Today's ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide," said Treasury Secretary Jacob J. Lew. "This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change." The Supreme Court's DOMA decision put the Treasury and IRS in a difficult spot, because the government typically has used a residency standard to determine whether taxpayers are married for federal tax purposes.
Treasury officials say they concluded the best approach was to treat legally married same-sex couples the same, no matter where they live. Making a married couple's filing status dependent on the law in their state of residence would have been difficult to administer, a senior Treasury official said. The official said the government chose the same course several decades ago in deciding to recognize so-called common-law marriages regardless of where the couple lived subsequently.
Some conservatives said Thursday's ruling opens the door to lawsuits by same-sex couples, arguing that a state's tax laws are unfair.Some legal experts say this ruling today could encourage and strengthen challenges to state laws forbidding gay marriage or penalizing same-sex couples in their tax filings.
"It's interpreting the law in a way that will guarantee further court action," said Brian Brown, president of the National Organization for Marriage. "It's like they're almost intentionally trying to create a mess…People will say they are being treated differently in states that don't recognize [same-sex marriage]."
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling doesn't apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
SOURCE : http://online.wsj.com/article/SB10001424127887324009304579043082275607214.html
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