Nanette Lee Miller, West Coast Partner-In-Charge of Assurance Services, Interviewed on National Public Radio's Morning Edition "High Court's Decision on Federal Marriage Law has Tax Implications"
How the Supreme Court decides the Defense of Marriage Act could mean changes for how same-sex couples file taxes. But experts say checking off the “married” box on tax forms will be a mixed bag for some gay couples.
When advocates for gay marriage talk about it, they usually focus on the struggle for equality and civil rights.
But how the Supreme Court decides the Defense of Marriage Act case being argued this week could possibly have big implications in another arena – the money same-sex couples owe the Internal Revenue Service.
The case that could throw out a law that defines marriage as between a man and woman started with a tax bill.
Edie Windsor married her partner of more than 40 years in Canada in 2007. Their relationship was recognized by the state of New York, where they lived together. But when her spouse died two years later, Windsor inherited a huge estate tax bill – a bill she would have avoided if her marriage had been recognized under federal law.
Gay Couples Plan Ahead
“The big thing that people need to be aware of is that you have to actively plan if you’re LGBT in your estate or individual taxes, because the law is not set up to protect you,” says Nanette Lee Miller, an accountant who works with gay and lesbian clients.
Miller says many of those couples are watching the Supreme Court this week for clues about what’s in store for their own finances.
They don’t get a marital deduction for estate tax purposes, so they usually need access to cash or life insurance to be able to inherit their partner’s share of a home or other assets.
That could change, if the high court rules for Windsor and declares the 1996 Defense of Marriage Act unconstitutional. In that case, same-sex couples would get the same estate tax benefits as married partners.