Drastic changes to tax and estate planning for same-sex couples

Fed decision allows marriage benefits nationwide — with more to come

Aug 30, 2013 @ 12:01 am

By Darla Mercado

Certified public accountants, tax attorneys and financial advisers will want to revisit their estate-planning techniques for same-sex couples now that the Treasury Department and the Internal Revenue Service recognize these marriages for federal tax purposes.

Tax experts have been waiting for the IRS and the Treasury Department to provide additional guidance on taxes since the June 26 defeat of a key provision in the Defense of Marriage Act. Treasury announced the additional guidance on Thursday.

Under the new ruling, same-sex couples will be viewed as married for all federal tax purposes, including gift, income and estate taxes. This ruling will also apply to federal tax provisions where marriage is a factor, such as employee benefits, claiming earned income tax credits, contributing to an IRA and taking the standard deduction.

Though the ruling will apply to any same-sex couple who were legally married in the U.S. or in a foreign country, it won't apply to domestic partnerships, civil unions and other relationships.

Accountants and financial advisers should note that same-sex couples must file their 2013 federal income taxes either as “married filing jointly” or “married filing separately.”

Same-sex couples can submit claims for refunds for taxes they paid as single individuals — even though they were legally married — in 2010, 2011 and 2012. The statute of limitations for filing refund claims is three years from when the return was filed or two years from when the taxes were paid, whichever is later.

Overall, same-sex spouses can now take advantage of estate-planning techniques, such as the portability of the estate tax exemption and gift splitting, according to Robert Keebler, an accountant at Keebler & Associates LLP. “The IRS has done a nice job of implementing Windsor,” he said, referring to the Supreme Court decision. “This is an opportunity to revisit those techniques for same-sex couples.”

Coming up, the Treasury Department and IRS will issue streamlined procedures for employers who want to file refund claims for payroll taxes paid on health insurance and fringe benefits for same-sex spouses. The two federal agencies will provide further guidance on how qualified retirement plans ought to treat same-sex spouses for periods before the date of today's ruling.


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