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Same-sex marriage and tax planning: IRS rules on joint filing

Massachusetts is one of the states that ed the way on the recognition of same-sex marriage. Several more states have followed in the last couple of years. And now, for purposes of federal tax returns, the rest of the country has followed as well.

The Treasury Department ruled last week that married couples of the same sex can claim "married" status when filing their federal income taxes. These couples can do this even if the state they live on has not legalized same-sex marriage.

This means that same-sex married couples will now face the choice that other married couples face regarding whether to file jointly or separately.

There are of course numerous factors that can affect that choice. Income levels, whether one or both spouses are working, and available tax credits and deductions must all be considered.

The IRS has issued detailed rules to govern how these and other factors will affect the federal tax obligations of same-sex married couples.

It is too soon to say whether the ability to file joint tax returns could lead at least some same-sex couples to get married. But it is clear that the Treasury ruling will have broad applicability.

After all, there are many specific tax rules where marital status affects tax calculations. For example, prior to the Treasury ruling, same-sex married couples were at a disadvantage compared to their heterosexual peers when it came to taxation of benefits from a spouse's health insurance. 

Estate tax considerations are also intertwined with developments in the law on same-sex marriage. Indeed, as we discussed in our March 27 post, it was the lack of an estate tax exemption for surviving same-sex spouses that prompted the U.S. Supreme Court's ruling striking down key elements of the federal Defense of Marriage Act earlier this year.

Source: The New York Times, "Gay and Married Couples in New Land of Taxation," Tara Siegel Bernard, August 31, 2013

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