Federal Tax Treatment of Married Same-Sex Couples
On August 29, 2013, the Internal Revenue Service ruled that married same-sex couples will be treated the same as married heterosexual couples for all federal tax purposes, including income and gift and estate taxes. Revenue Ruling 2013-17 applies to all federal tax provisions where marriage is a factor, which includes filing status, personal and dependency exemptions, the standard deduction, employee benefits, IRA contributions, the earned income tax credit, and child tax credit. This ruling was issued in response to the Supreme Court’s decision in United States v. Windsor earlier this year, which held that a portion of the Defense of Marriage Act was unconstitutional.
In keeping with a longstanding policy regarding marriages, the IRS also ruled that if a same-sex marriage is valid in the state where entered into, it will be recognized by the IRS as valid regardless of whether the marriage is recognized by the state in which the couple resides. This means that same-sex couples who are lawfully married, but reside in a state that does not recognize same-sex marriage, will be treated as married for federal tax purposes, but likely will not for state tax purposes.
The ruling applies only to couples who are married. It does not apply to registered domestic partnerships, civil unions, or similar relationships recognized under various state laws.
This ruling will be applied prospectively beginning September 16, 2013. Additionally, affected taxpayers may, but are not required to, file amended returns to elect to be treated as married for federal tax purposes for prior years which are still open under the statute of limitations. Generally, the statute of limitations 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. Consequently, same-sex couples who were married in those years and could see a tax benefit can file refund claims for tax years 2010, 2011 and 2012.
Not all issues raised by the Supreme Court’s decision in Windsor are addressed in this ruling. In particular, the ruling recognizes that additional guidance is needed on the retroactive application of Windsor.
IRS Circular 230 Notice
Internal Revenue Service regulations state that only a formal opinion that meets specific requirements can be used to avoid tax penalties. Any tax advice in this communication is not intended or written to be used, and cannot be used by a taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer, because it does not meet the requirements of a formal opinion.