Earlier Wednesday, in United States v. Windsor , the U. Supreme Court overturned the Defense of Marriage Act DOMA in a vote led by Justice Kennedy who was joined by the four liberal members: Justices Ginsburg, Breyer, Sotomayor, and Kagan, affecting the potential tax situation in which same-sex couples will find themselves. While this ruling will certainly be viewed as a major victory for the LGBT community, it is not without significant tax and financial planning implications that will need to be addressed by all same-sex couples considered legally married in at least one state.
In many cases, it may portend a check to the Treasury. As of June, , eleven states and the District of Columbia allowed same-sex marriage 1. The census revealed that there were , same-sex couples in the U.
While this represents a small percentage of the nearly 79 million married couples in the U. If anything, for now, it gets a little easier for professionals. With same-sex married couples being treated the same as traditional married couples at the federal level, tax planning will get moreโฆ wellโฆ traditional.
Such couples are now effectively able to take advantage of the Married Filing Joint, Married Filing Separately, and Qualified Widow er statuses once reserved for traditional marriages. The catch: these statuses may apply retroactively to the federal returns of same-sex married couples who were married prior to January 1, That means that filing amended returns for such couples might be necessary in order to take what were two Single or Head-of-Household returns and re-categorize them as a sole Married Filing Jointly return, two Married Filing Separately returns, or in some even rarer cases, Qualifying Widow er returns.
This can pose a problem. This would have yielded the most advantageous tax position for the family as a whole. Unfortunately for that family, the rules just changed and that may force them to amend as either a joint return or two Married-Filing-Separately returns. Most likely, the best position will be to file jointly. While the IRS obviously has yet to respond to the ruling and issue guidance on whether these couples will have to amend their returns or how long they would have to comply, the regulations generally state that once a taxpayer is aware of a change, he or she should amend the return as soon as possible in order to mitigate penalties and minimize interest.
