The United States Supreme Court, in the Windsor decision from June 26, 2013, invalidated as unconstitutional a portion of the 1996 Defense of Marriage Act (DOMA). The Internal Revenue Service (IRS) and U.S. Department of Treasury ruled on August 29, 2013 that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. This federal status applies whether or not the jurisdiction in which the married couple lives recognizes their marriage.
“Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide. It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve. 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,” said U.S. Treasury Secretary Jacob Lew in his statement.
According to this ruling same-sex couples who have legally entered into marriage in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling for federal tax purposes-the treatment is the same as that of other legally married couples. This ruling applies to federal income, estate and gift taxes.
This ruling does not apply to registered domestic partnerships, civil unions, or other similar formal relationships-just marriage. Accordingly, legally married same-sex couples may file their individual income tax returns as married filing jointly, married filing separately; head of household and qualifying widow(er) with dependent child.
Further, qualifying taxpayers may file amended returns for tax years still open under the statute of limitations. The limitations period for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. The new ruling allows qualifying taxpayers to claim refunds for 2010, 2011 and 2012.
This is going to significantly change tax-related estate planning for married, same-sex couples. No more unintended taxable “gifts” from one spouse to the other or missed estate-tax saving opportunities as the unlimited marital deduction will apply.
Both Treasury and the IRS intend to issue further guidance on these tax-related issues.