June 26, 2013
Tax Implications of Supreme Court Ruling on the Defense of Marriage Act (DOMA)
With the overturning of the Defense of Marriage Act (DOMA) by the United States Supreme Court today, same-sex couples who were legally married in the 12 states that recognize their marriages, plus the District of Columbia, can now take advantage of the more than 1100 federal benefits that heterosexual married couples have been entitled to. This includes joint federal tax returns, unlimited federal and state tax marital deductions, stretch rollovers for retirement plan distributions, social security benefits, portability of the unified credit and access to immigration laws pertaining to residency for a spouse.
There is an opportunity to file amended individual income tax returns for same-sex married couples for any open statute years, normally three years from the filing date.Estate tax returns filed in the same periods may also be open to amendment. This should be reviewed with your tax advisor. This is a huge planning opportunity, as most estate plans for same-sex married couples will need to be amended to take the federal changes into account.
For same-sex couples considering marriage as an economic strategy, a tax projection should be done prior to determine any tax implications for the timing of the nuptials.
Remember, there are still 50 states with 50 different tax filing scenarios, so it is important to consult your tax advisor about the specifics of your individual needs.