Back in July I wrote about the tax effects of the DOMA decision, where I mentioned there are still some uncertainties out there such as how the IRS would respond. At the time of the decision, the IRS said it would “move swiftly to provide revised guidance in the near future.” Well today the IRS provided that guidance by issuing a ruling that same sex couples will be treated as married for federal tax purposes. This will be the case even for legally married same sex couples in states that do not recognize same sex marriage. Now that the IRS has made this ruling it will certainly affect various areas of tax planning for same sex couples.
The ramifications of this decision will not just apply to income tax, but will also stretch to estate and gift taxes. This means same sex couples will now file as married (either jointly or separately) and reap the income tax advantages of being married. Of course this also means that some same sex couples will suffer from the marriage penalty. Additionally, same sex couples will see tax breaks from employee benefits, retirement contributions, gift splitting, and the portability election.
One significant benefit of this ruling is that same sex couples have the option of filing as married starting in 2013 or retroactively amending prior year returns to get refunds that were not available before the ruling. For same sex couples trying to figure out the most advantageous route to take, the best option is to talk with a tax attorney to see what the best course of action is for the past, present, and future.
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